UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                               WASHINGTON, DC 20549

                                   FORM 10-K


  X  	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
          SECURITIES EXCHANGE ACT OF 1934

                For the fiscal year ended DECEMBER 31, 2001 or

       	TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
          SECURITIES EXCHANGE ACT OF 1934

                         Commission file number 0-20882

                        Standard Management Corporation
            (Exact name of registrant as specified in its charter)

               Indiana                             35-1773567
	(State or other jurisdiction of            (I.R.S. employer
	incorporation or organization)	       identification no.)

	10689 North Pennsylvania Street,
     Indianapolis, Indiana 46280	              (317) 574-6200
	(Address of principal executive offices)	(Telephone)

Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Common
Stock, No Par Value

Indicate by check mark whether the registrant: (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes   X    No

Indicate by check mark if disclosure of delinquent filers pursuant
to Item 405 of Regulation S-K is not contained herein, and will
not be contained, to the best of registrant's knowledge, in
definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [  ]

The aggregate market value of the voting stock held by non-
affiliates of the Registrant, based upon the closing sale price of
the Common Stock on March 15, 2002 as reported on The NASDAQ Stock
Market, was approximately $39.6 million. Shares of Common Stock
held by each executive officer and director and by each person who
owns 5% or more of the outstanding Common Stock have been excluded
in that such persons may be deemed to be affiliates. This
determination of affiliate status is not necessarily a conclusive
determination for other purposes.

As of March 15, 2002 Registrant had outstanding 7,563,479 shares
of Common Stock.

Documents Incorporated by Reference:
Portions of the Registrant's definitive Proxy Statement for the
Annual Meeting
of Shareholders are incorporated by reference into Part III of
this Form 10-K.





PART I


As used in this report, unless the context otherwise clearly
requires, "we", "our", "us", "Standard Management", and the
"Company" refer to Standard Management Corporation. All financial
information contained in this report is presented in accordance
with generally accepted accounting principles ("GAAP")
unless otherwise specified.

Item 1.		BUSINESS OF STANDARD MANAGEMENT

Standard Management is an international financial services holding
company that develops, markets and/or administers, through several
subsidiaries, annuity and life insurance products domestically and
unit-linked assurance products, which are investment products with
a nominal death benefit, internationally.  Our company has grown
through acquisitions until 1999 when we began to focus
primarily on internal organic growth.

Operating Segments

We conduct and manage our business through the following operating
segments reflecting the geographical locations of principal
insurance subsidiaries:

Domestic Operations includes the following insurance subsidiaries
at December 31, 2001:

* Standard Life Insurance Company of Indiana ("Standard Life"),
our principal insurance subsidiary, was organized in 1934 as an
Indiana domiciled life insurer. It is licensed to write new
business or service existing business in the District of Columbia
and all states except New York and New Jersey. Standard Life
offers deferred annuities, equity-indexed annuities, and single
premium immediate annuities.  Effective August 2001, we suspended
active marketing of life products indefinitely, however we
continue to manage our in force life business.  Standard Life also
generates cash flow and income from closed blocks of in force life
insurance and annuities. Standard Life has a rating of B++
(Very Good) from the rating agency A.M. Best Company, Inc. ("A.M.
Best").

* Dixie National Life Insurance Company ("Dixie Life"), a 99.4%
owned subsidiary of Standard Life, was organized in 1965 as a
Mississippi domiciled life insurer.  Dixie Life is licensed in 22
states and administers life insurance products, primarily "burial
expense" policies.  Effective January 1, 1999, we ceased
selling new business through Dixie Life which has a rating of "B"
(Fair) by A.M. Best.

* Savers Marketing Corporation ("Savers Marketing") markets
Standard Life's products through financial institutions and
independent agents.  Savers Marketing also receives
administrative, marketing and commission fees for services
provided to unaffiliated companies.

International Operations include the following holding company and
its two wholly owned insurance subsidiaries at December 31, 2001:

* Standard Management International S.A. ("Standard Management
International"), a wholly owned subsidiary of Standard Management,
is a holding company organized under Luxembourg law with its
registered office in Luxembourg.  At December 31, 2001, Standard
Management International and its subsidiaries had policies in
force in over 80 countries. The majority of its business is unit-
linked assurance products with a range of policyholder directed
investment choices coupled with a small death benefit, sold
through its subsidiaries.

* Premier Life (Luxembourg) S.A. ("Premier Life (Luxembourg)")
primarily offers unit-linked products throughout the European
Union.

* Premier Life (Bermuda) Limited ("Premier Life (Bermuda)")
primarily offers unit-linked products in markets throughout the
world.

Marketing

Domestic Marketing

General: Our agency force, of approximately 7,700 independent
general agents, was organized to provide a lower cost alternative
to the traditional captive agency force.   These agents distribute
a full line of annuity products issued by Standard Life.

We believe that both agents and policy owners value the service we
provide. We assist agents in 1) submitting and processing policy
applications, 2) training and education, and 3) marketing support.

Standard Life offers a full portfolio of annuity products selected
on the basis of their competitive position, profitability and
likely consumer acceptance. Such portfolio includes single and
flexible premium deferred annuities, equity-indexed annuities and
single premium immediate annuities.

Each general agent operates his own agency and is responsible for
all expenses of the agency.  The general agents are compensated
directly by Standard Life, who performs issuance, underwriting and
accounting functions related to the policy. Standard Life is not
dependent on any one agent or agency for any substantial amount of
its business.  No single agent accounted for more than 3%
of Standard Life's annual annuity sales in 2001, and the top
twenty individual agents accounted for approximately 24% of
Standard Life's annuity sales in 2001.  At December 31, 2001,
approximately 48% of Standard Life's independent agents
were located in Indiana, California, Florida, Ohio and Arizona
with the balance distributed across the country.  Standard Life is
attempting to increase the number and geographic diversity of its
agents.

Standard Life does not have exclusive agency agreements with its
agents. Therefore, our management believes most of these agents
sell similar products for other insurance companies which could
result in a sales decline if Standard Life's products were to
become relatively less competitive.

Savers Marketing distributes life, annuity and health products
through financial institutions and independent general agents.
Savers Marketing has approximately 2,500 active brokers and is not
dependent on any one broker or agency for any substantial amount
of its business. Each broker operates independently and is
responsible for all of his or her expenses.  Savers Marketing
employs two regional managers, who are responsible for personally
initiating and maintaining direct communications with brokers and
are responsible for the recruitment and training of all new
brokers.

Savers Marketing entered into a three-year marketing and
administrative contract with QualChoice of North Carolina
("QualChoice") effective October, 1998 whereby Savers Marketing is
the distribution system for the small group product offered
by QualChoice.  QualChoice is an HMO in a twenty-county area in
the northwestern part of North Carolina offering HMO
insurance coverage.  Savers Marketing is compensated for this
effort with a marketing fee, administrative fee and commission
reimbursement for the use of its brokers.  This agreement has been
extended through June 2002, at which time QualChoice will
no longer provide group products.

Savers Marketing designed and began to market flexible spending
accounts and health insurance portability products in
late 2001 which generates administrative fees.

International Marketing

Standard Management International has designed and launched new
single and regular premium products in recent years.
It is also in discussions with a number of distribution companies
to form alliances to produce tailored products for their markets.
Premier Life (Luxembourg) writes business within the European
Union and Premier Life (Bermuda) writes international business
throughout the world. The primary market for Standard Management
International's products are considered to be medium to high
net worth individuals who typically have in excess of $100,000 to
invest in a single premium policy and medium to high earners
who have in excess of $3,000 per annum to invest in a regular
premium savings product. The above individuals come from a
combination of expatriates, residents of European Union countries
and from other targeted areas. The expatriate and European
insurance markets are well established and highly competitive with
a large number of domestic and international groups operating
in, or going into, the same markets as Standard Management
International.

Standard Management International's products are distributed
through independent agents and stock brokers who have
established connections with targeted individuals. Standard
Management International is striving to develop into an
organization committed to building long term relationships with
high quality distributors.  Standard Management International
places emphasis on a high level of service to intermediaries and
policyholders while striving to achieve low overhead costs. No
single agent or broker accounted for more than 14% of Standard
Management International's annual sales for 2001, and the top ten
agents and/or brokers accounted for approximately 52% of annual
sales for 2001.


Currently Marketed Products

We primarily market deferred annuities, equity-indexed annuities,
and single premium immediate annuities domestically,
and unit-linked assurance policies internationally.  The following
table sets forth the amounts and percentages of our net deposits
received from currently marketed products for the following years
(in thousands):


                                     Year Ended December 31,
                            2001            2000           1999
                       Amount    %     Amount    %    Amount    %

Domestic products
  Deferred annuities  $178,238  46.2 $ 94,699  26.3 $ 98,678  45.6
  Equity-indexed
   annuities            67,159  17.4   73,122  20.3   59,348  27.4
  Single premium
    immediate annuities 66,269  17.2   21,506   6.0    3,162   1.5
     Total Domestic
      Products        $311,666  80.8 $189,327  52.6 $161,188  74.5
International products
  Unit-linked assurance
  products              74,364  19.2  170,514  47.4   55,192  25.5
                      $386,030 100.0 $359,841 100.0 $216,380 100.0

Domestic Products

Deferred Annuities. Standard Life markets both single and flexible
premium deferred annuities, which provide for an initial
deposit by the owner.  Flexible premium products also provide for
optional additional deposits, the time and amount of which are
at the discretion of the owner.  Standard Life credits the account
of the owner with earnings at interest rates that are revised
periodically until the maturity date. This accumulated value is
tax deferred. Revisions to interest rates on flexible premium
deferred annuities are restricted by an initial crediting rate
guaranteed for a specific period of time, usually one year, and a
minimum crediting rate guaranteed for the term of the flexible
premium deferred annuity, which is typically 3%. At maturity, the
owner can elect a lump sum cash payment of the accumulated value
or one of the various payout options available. Standard Life's
flexible premium deferred annuities also typically provide for
penalty-free partial withdrawals of up to 10% annually of the
accumulation value after the owner has held the flexible premium
deferred annuity for more than 12 months. In addition, the owner
may surrender the flexible premium deferred annuity at any time
before the maturity date and receive the accumulated value, less
any surrender charge then in effect for that contract. To protect
holders of flexible premium deferred annuities from a sharp
reduction in the credited interest rate after a flexible premium
deferred annuity is issued, Standard Life permits the flexible
premium deferred annuity holder of certain annuities to surrender
the annuity during a specified period without incurring a
surrender charge if the renewal-crediting rate is below a stated
level. This stated level of interest is referred to as the "bail-
out rate" and is typically below the original crediting rate, but
above the minimum guaranteed crediting rate.  Certain products
also contain a market value adjustment feature, whereby a
policyholder's surrender value is adjusted for changes in the
interest rate environment.  This feature protects us against the
risk of policyholder surrender when asset values are depressed.

As of January 1, 2002, the crediting rates available on Standard
Life's currently marketed deferred annuities ranged from
4.25% to 11.50%, with most new issues having an interest rate with
a one-year guarantee period. A series of annuity products
introduced in 2000 have their interest rate guaranteed for an
initial period of 5-10 years. After the initial period, the
crediting rate may be changed periodically, subject to a minimum
guaranteed rate of 3.0%. As of January 1, 2002, interest crediting
rates after the initial guarantee period ranged from 4% to 5.5%.
The surrender charge is initially 7% to 15% of the contract value
depending on the product and decreases over the applicable
surrender charge period of five to thirteen years. Certain
currently marketed products carry a bailout rate for the first two
to five years after issuance; as of January 1, 2002, the bailout
rate for such products ranged from 4.0% to 4.5%.   As of December
31, 2001, Standard Life had 9,978 currently marketed deferred
annuity contracts in force.

Equity-indexed Annuities.  In response to consumers' desire for
alternative investment products with returns linked to
common stocks, Standard Life introduced a line of equity-indexed
annuity products in May 1998. The annuity's contract value
is equal to the premium paid, increased for returns based on the
change in the Standard & Poor's 500 Index ("S&P 500 Index")
and/or the Dow Jones Industrial Average Index ("DJIA"). Standard
Life's equity-indexed annuities apply index credits to
policyholders annually, so that a given year's equity credits are
locked in, and cannot be reduced by future declines in the index.
Two basic index crediting methods are used for Standard Life's
equity-indexed annuities, "participation rate" crediting and
"spread/cap" crediting. For participation rate products, a
percentage (the participation rate) of the change in the index
accrues to the contract value. For spread/cap products, increases
in the index up to the spread amount do not accrue to the contract
value, but above the spread, the contract is credited the full
amount of the increase in the index up to the limit of the cap.
Standard Life has the discretionary ability to annually change the
participation rates and spreads/caps on its products. The minimum
guaranteed values are equal to between 75% and 85% of first year
premiums and between 87.5% and 90% of renewal premiums collected
for equity-indexed annuities, plus interest credited at an annual
rate of 3%.  The annuities provide for penalty-free withdrawals of
up to 10% in each year after the first year of the annuity's term.
Other withdrawals from the product are subject to a surrender
charge.  Standard Life purchases S&P's 500 Index or DJIA Index
Call Options to hedge potential increases to policyholder benefits
resulting from increases in the Index to which the product's
return is linked.  As of December 31, 2001, Standard Life had
4,933 currently marketed equity-indexed contracts in force.

Single Premium Immediate Annuities.  Standard Life offers single
premium immediate annuities which are purchased with
a one time premium deposit at the time of issuance.  In exchange
for a one-time premium deposit, Standard Life begins an agreed
upon payout stream shortly after issuance of the contract
consisting of principal plus accumulated interest credited to the
annuity. Payout is guaranteed for the term of the contract.  A new
single premium immediate annuity product was introduced in the
first quarter of 2000, which resulted in a significant increase in
sales for 2000 and 2001. As of December 31, 2001, Standard Life
had 1,454 currently marketed single premium immediate annuity
contracts in force.

Other Domestic Product Information.  Annuity sales increased in
2001 primarily due to greater productivity per agent,
expanded geographic presence, enhanced product portfolio and an
A.M. Best ratings increase to B++ (Very Good).

Individual annuity sales within the United States have nearly
tripled from $54 billion in 1990 to more than $140 billion
in 2000, according to the American Council of Life Insurers. The
individual annuity market, which is one of our primary targets,
comprises virtually all of our domestic sales and 80% of total
sales in 2001. As the 76 million "baby boomers" born from 1946
through 1964 grow older, demand for insurance products is expected
to grow. We believe that those seeking adequate retirement
incomes will become less dependent on Social Security and their
employers' retirement programs and more dependent upon their
own financial resources. Annuities currently enjoy an advantage
over certain other saving mechanisms because the annuitant
receives a tax-deferred accrual of interest on the investment
during the accumulation period.

Our gross domestic sale percentages by U.S. geographical region
are summarized as follows:

State                  2001         2000          1999
California              21%          15%           11%
Indiana                 18           19            15
Florida                 11            9             8
Ohio                     7            9            14
North Carolina           5            6             8
Wisconsin                5            4             2
Michigan                 5            4             1
Hawaii                   4            6             5
All other states (1)    24           28            36
Total                  100%         100%          100%

(1) No other state had gross sales greater than 4% in 2001.

International Products

Unit-linked Assurance Products.  Standard Management International
currently writes unit-linked assurance products,
which are similar to U.S. produced variable life products.
Separate account assets and liabilities are maintained primarily
for the exclusive benefit of these contracts, where benefits on
surrender and maturity are not guaranteed.  They generally
represent funds held in accounts to meet specific investment
objectives of policyholders who bear the investment risk. Products
include 1) single premium unit-linked contracts, with publicly
traded investment options, 2) annual premium unit-linked
contracts, with publicly traded investment options and 3) personal
portfolio contracts, which include private stock and limited
market investment options. Investment income and investment gains
and losses within the separate accounts accrue directly to the
policyholders. The fees received by Standard Management
International for administrative and contract holder maintenance
services performed for these separate accounts are included in our
statement of operations.  Mortality risk on these products is
minimal.

In the past Standard Management International also sold non-linked
investment contracts, universal life policies, and to
a lesser extent, traditional life policies. The investment
contracts are mainly short-term single premium endowments or
payout annuities under which fixed benefits are paid to the
policyholder.  The universal life contracts are mainly regular
premium and single premium endowment. The benefits payable to the
policyholders are directly linked to the investment performance of
the underlying assets.  Non-linked products represent less than 2%
of Standard Management International's product liabilities.

Other International Product Information.  The decrease in deposits
from unit-linked products in 2001 is primarily due to the volatile
global equity environment which tended to shift sales to
fixed-income based investments.

Former Products ("Closed Blocks")

We also generate cash flow and income from our closed blocks of in
force life insurance and annuities. Closed blocks
consist of in force life insurance and annuities that are not
currently being marketed. The closed block designation does not
have legal or regulatory significance and there are no
restrictions on their assets or future profits.  The premiums
received on the closed blocks are primarily from the ordinary and
universal life business. Closed block premiums typically decline
over extended periods of time as a result of policy lapses,
surrenders and expiries.

Annuities.  Our closed blocks of deferred annuities consist
primarily of flexible premium deferred annuities and a small
amount of single premium deferred annuities, which, unlike
flexible premium deferred annuities, do not provide for additional
deposits.  As of January 1, 2002, these deferred annuities had
crediting rates ranging from 3.0% to 5.5% and guaranteed minimum
crediting rates ranging from 3.0% to 5.5%. The crediting rate may
be changed periodically. The contract owner is permitted to
withdraw all or part of the accumulation value. Our closed blocks
of annuities include payout annuities which consist of annuities
in which benefits are paid out over a specified time period.
Payout annuities cannot be terminated by surrender or withdrawal.
Interest rates used in determining payout annuities range from
3.0% to 7.0% and cannot be changed.  At December 31, 2001, we
had 12,117 annuity contracts in force for closed blocks.

Traditional Life. Our closed blocks of traditional life business
include several types of participating and non-participating,
whole life and term life insurance policies. Face amounts vary,
but retained death benefits are $150,000 or less per life.
Traditional life insurance products involve fixed premium payments
made over time, with the stated death benefit paid in full upon
the death of the insured. The whole life policy combines the death
benefit with a forced savings plan. Premiums remain level over the
life of the policy, with the policyholder prefunding during the
early years of coverage when risk of death is low. Over time,
whole life policies begin to accrue a cash value, which can be
made available to the policyholder net of taxes and withdrawal
penalties.  The term policy provides benefits only as long as
premiums are paid.  At December 31, 2001, we had 36,819
traditional life policies in force for closed blocks.

Universal Life. Our closed blocks of universal life business
include flexible premium universal life policies which provide
for periodic deposits, interest credits to account values and
charges to the account values for mortality and administrative
costs.  As of January 1, 2002, the interest rate on existing
flexible premium universal life policies was 4% to 5% with a
guaranteed interest rate of 4%.  At December 31, 2001, we had
10,756 universal life policies in force for closed blocks.

See "Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations - Product Profitability".

Operations

Our principal administrative departments include financial, new
business and policyholder services, and management
information services ("MIS") departments. The financial department
provides accounting, budgeting, tax, investment, financial
reporting and actuarial services and establishes cost control
systems. The new business department reviews policy applications,
and issues and administers our policies. The policyholder services
department authorizes disbursements related to claims and
surrenders. The MIS department oversees and administers our
information processing systems.

Our administrative departments in the United States ("U.S.") use a
common integrated policy administration system that
permits efficiency and cost control.  Our MIS system services
approximately 87,000 active policies at December 31, 2001.

Standard Management International's administrative departments in
Luxembourg are an autonomous unit, operating independent of U.S.
operations.  In 2000, Standard Management International integrated
a policy administration system consistent with that used for
domestic operations, in an effort to enhance efficiency and
effectiveness.

Underwriting

Premiums charged on life insurance products are based in part on
assumptions about the incidence and timing of insurance
claims. When we issued life insurance business, we adopted and
followed underwriting procedures for universal life insurance
policies. Life insurance does not allow for underwriting after a
policy is issued. Since we no longer issue new life insurance
policies, life insurance underwriting activities are minimal and
occur only when a policyholder requests a change which is subject
to underwriting.  Underwriting with respect to annuities is
minimal.

Traditional underwriting procedures are not applied to policies
acquired in blocks. In these cases, we review the mortality
experience for recent years and compare actual experience to that
assumed in the actuarial projections for the acquired policies.

Investments

Investment activities are an integral part of our business as the
investment income of our insurance subsidiaries are a
significant part of total revenues. Profitability is significantly
affected by spreads between interest earned on invested assets and
rates credited on insurance liabilities.  Substantially all
credited rates on flexible premium deferred annuities may be
changed at least annually. For the year ended December 31, 2001,
the weighted average net yield of our investment portfolio was
7.14% and the weighted average interest rate credited on our
interest-sensitive liability portfolio, excluding liabilities
related to separate accounts and equity indexed annuities, was
approximately 5.00% per annum for an average investment spread of
214 basis points at December 31, 2001, compared to 236 basis
points at December 31, 2000. The decline in the investment spread
is primarily driven by the impact and significance of our 2001
annuity deposits.  Annuity deposits received in 2001 were invested
during a declining interest rate environment, the yield being
below the current portfolio yield.  In addition, interest credited
on new deposits are most generally in excess of interest credited
on existing in force business.  We were unfavorably impacted by
both of these factors.  Increases or decreases in interest rates
could increase or decrease the average interest rate spread
between investment yields and interest rates credited on insurance
liabilities, which in turn could have a beneficial or adverse
effect on our future profitability. Sales of fixed maturity
securities that result in investment gains may also tend to
decrease future average interest rate spreads.
State insurance laws and regulations prescribe the types of
permitted investments and limit their concentration in certain
classes of investments.

We balance the duration of our invested assets with the expected
duration of benefit payments arising from insurance
liabilities. The "duration" of a security is a measure of a
security's price sensitivity to changes in market interest rates.
The option adjusted duration of fixed maturity securities and
short-term investments for our U.S. insurance subsidiaries was 5.1
and 4.4 at December 31, 2001 and 2000, respectively.

Our investment strategy is guided by strategic objectives
established by the Investment Committee of the Board of
Directors. Our major investment objectives are to: 1) ensure
adequate safety of investments and protect and enhance capital,
2) maximize after-tax return on investments, 3) match the
anticipated duration of investments with the anticipated duration
of policy liabilities and 4) provide sufficient liquidity to meet
cash requirements with minimum sacrifice of investment yield.
Consistent with this strategy, we invest primarily in securities
of the U.S. government and its agencies, investment grade
utilities, corporate debt securities and collateralized mortgage
obligations.  When opportunities arise, below investment grade
securities may be purchased; however, protection against default
risk is a primary consideration. We will not invest more than 7%
of our bond portfolio in below investment grade securities.

The National Association of Insurance Commissioners ("NAIC")
assigns quality ratings and uniform book values to
securities called "NAIC Designations" which are used by insurers
when preparing their annual statements. The NAIC assigns
ratings to publicly traded and privately-placed securities. The
ratings assigned range from Class 1 to Class 6, with a rating in
Class 1 being of the highest quality.  The following table sets
forth the quality of our fixed maturity securities as of December
31, 2001, classified in accordance with the ratings assigned by
the NAIC:

                                                 Percent of Fixed
               NAIC Rating                     Maturity Securities
               1                                       51
               2                           		     44
               Total Investment Grade                  95
               3-4                                      5
               5-6                                      0
               Total		                        100%

Zurich Scudder Investments manages our domestic fixed maturity
securities, subject to the direction of our Investment
Committee.

Approximately 31% of our fixed maturity securities at December 31,
2001 are comprised of mortgage-backed securities
that include collateralized mortgage obligations and mortgage-
backed pass-through securities. Approximately 33% of the book
value of mortgage-backed securities in our portfolio are backed by
the full faith and credit of the U.S. government as to the full
amount of both principal and interest and 35% are backed by an
agency of the U.S. government (although not by the full faith and
credit of the U.S. government).  We closely monitor the market
value of all investments within our mortgage-backed portfolio.

The following table summarizes our mortgage-backed securities at
December 31, 2001 (in thousands):
                                                            Estimated    Avg.
                                  % of             % of     Avg. Life    Term
                      Amortized   Fixed    Fair    Fixed        of     to Final
                        Cost    Maturities Value Maturities Investment Maturity
                                                            (In Years)(In Years)

Agency collateralized
 mortgage obligations:
Planned and target
 amortization classes  $ 14,311    1.5%  $ 14,789  1.6%        4.1       24.9
Sequential and support
 classes	              2,918    0.3%     2,988  0.3%        7.0       22.4
  Total	             17,229    1.8%    17,777  1.9%        5.6       23.7
Non-agency
 collateralized mortgage
 obligations:
 Sequential classes	 16,359    1.8%    16,648  1.8%        3.7       29.2
 Other	             73,756    7.9%    74,754  8.1%        6.4       29.9
    Total	             90,115    9.7%    91,402  9.9%        5.1       29.6
Non agency collateralized
 mortgage-backed
 securities	              3,065    0.3%     3,227  0.3%        2.8       25.8

Agency mortgage-backed
 pass-through
 securities             176,393   18.9%   178,410 19.4%        2.7       30.0
Total mortgage-backed
 securities	           $286,802   30.7%  $290,816 31.5%        4.4       26.8

The fair values for mortgage-backed securities were determined
from broker-dealer markets, internally developed methods
and nationally recognized statistical rating organizations.

Certain mortgage-backed securities are subject to significant
prepayment risk, since, in periods of declining interest rates,
mortgages may be repaid more rapidly than scheduled as individuals
refinance higher rate mortgages to take advantage of the lower
current rates. As a result, holders of mortgage-backed securities
may receive large prepayments on their investment, which cannot
be reinvested at an interest rate comparable to the rate on the
prepaying mortgages.  These investments are designed to amortize
in a more predictable manner by shifting the primary risk of
prepayment of the underlying collateral to investors in other
tranches ("support classes"). Mortgage-backed pass-through
securities, "sequential" and support class collateralized mortgage
obligations, which comprised the remaining 95% of the book value
of our mortgage-backed securities at December 31, 2001, are more
sensitive to prepayment risk.

Separate Accounts

Separate account assets and liabilities are maintained for the
exclusive benefit of international unit-linked universal life
contracts, where benefits on surrender and maturity are not
guaranteed. They generally represent funds held in accounts to
meet specific investment objectives of policyholders who bear the
investment risk. Investment income and investment gains and losses
accrue directly to related policyholders.

Reserves

Our insurance subsidiaries have established and carry as
liabilities in their financial statements actuarially determined
liabilities to satisfy their respective annuity contract and life
insurance policy obligations.

Insurance policy liabilities for deferred annuities,
universal life policies and international unit-linked products are
equal to the full account value that accrues to the policyholder
(cumulative premiums less certain charges, plus interest credited)
with credited interest rates ranging from 3.0% to 11.5% in 2001
and 3.0% to 12.5% in 2000.

Insurance policy liabilities for equity-indexed annuity products
are computed in accordance with Statement of Financial
Accounting Standards No. 133 ("SFAS 133") and consist of a book
value liability for benefits guaranteed in the contract, combined
with a market value liability for equity-linked benefits of the
contract.

We perform periodic studies to compare current experience for
mortality, interest and lapse rates with projected
experience used in calculating the deferred annuity and universal
life insurance policy liabilities. Differences are reflected
currently in earnings for each period.  Historically, we have not
experienced significant adverse deviations from our assumptions.

Insurance policy liabilities for traditional life insurance
contracts are computed using the net level premium method on
the basis of assumed investment yields, mortality and withdrawals,
which were appropriate at the time the policies were issued.
Assumed investment yields are based on interest rates ranging from
6.2% to 7.5%.  Mortality is based upon various actuarial tables,
principally the 1965-1970 or the 1975-1980 Select and Ultimate
Table. Withdrawals are based upon our experience and vary by
issue age, type of coverage, and duration.

Reinsurance

Consistent with the general practice of the life insurance
industry, we have reinsured portions of the coverage provided
by our insurance products with other insurance companies under
agreements of indemnity reinsurance.  Our policy risk retention
limit on the life of any one individual does not exceed $150,000.

Indemnity reinsurance agreements are intended to limit a life
insurer's maximum loss on a particular risk or to obtain a
greater diversification of risk. Indemnity reinsurance does not
discharge the primary liability of the original insurer to the
insured, but it is the practice of insurers for statutory
accounting purposes (subject to certain limitations of state
insurance statutes) to account for risks which have been reinsured
with other approved companies, to the extent of the reinsurance,
as though they are not risks for which the original insurer is
liable. However, under Statement of Financial Accounting Standards
No. 113 ("SFAS 113"), "Accounting and Reporting for Reinsurance of
Short-Duration and Long-Duration Contracts" these amounts are
added back to policy reserves and recorded as amounts due from
reinsurers.

Reinsurance ceded on life insurance policies to unaffiliated
companies in 2001, 2000 and 1999, excluding financial
reinsurance agreements, represented 49.4%, 45.3% and 40.3%,
respectively, of our gross combined individual life insurance in
force at the end of such years.  Reinsurance assumed in the normal
course from unaffiliated companies in 2001, 2000 and 1999
represented 11.0%, 8.7% and 9.2%, respectively, of our net
combined individual life insurance in force.

The following is reinsurance ceded information for our in force
life insurance policies at December 31, 2001 (in
thousands):

                                       % of Total
                     Face Value of     Reinsurance     Reinsurance
Insurance Company    Life Policies        Ceded        Recoverable

Employers Reinsurance
Corporation            $ 179,869           18.3%        $     600

Lincoln National Life
Insurance Company        122,992           12.4%            1,181

Business Men's Assurance
Company of America        95,458            9.7%              383

Reinsured life insurance in force at December 31, 2001 is ceded to
insurers rated "A" ("Excellent") or better by A.M.
Best.  Historically, we have not experienced material losses in
collection of reinsurance receivables.

Our largest annuity reinsurer at December 31, 2001, SCOR Life U.S.
Insurance Company ("SCOR Life"), formerly
known as Winterthur Life Re Insurance Company, represented $20.6
million, or 66% of our total reinsurance recoverable and is
rated A (Excellent) by A.M. Best. SCOR Life limits dividends by
Standard Life to Standard Management or affiliated companies
if its adjusted surplus is less than 5.5% of admitted assets or
$53.6 million at December 31, 2001.

"Admitted assets" are defined by the National Association of
Insurance Commissioners as "probable future economic
benefits obtained or controlled by a particular entity as a result
of past transactions or events" which may be included in an
insurance company's balance sheet. Some assets or portions of
assets may be considered "nonadmitted" because they do not
conform to the laws and regulations of various states. Therefore,
certain assets which normally would be accorded value in
noninsurance corporations are accorded no value and thus reduce
the reported surplus of the insurance company.

Standard Life's adjusted surplus was $51.7 million on December 31,
2001, therefore, SCOR Life's approval will be
required prior to the payment of dividends to Standard Management
in 2002.

Acquisition Strategy and Recent Acquisitions

A principal component of our strategy prior to 1999 was to grow
through the acquisition of life insurance companies and
blocks of in force life insurance and annuities. Although our
focus has been on internal organic growth since 1999, we regularly
investigate acquisition opportunities in the life insurance
industry that complement or are otherwise strategically consistent
with our existing business. Any decision to acquire a block of
business or an insurance company will depend on a favorable
evaluation of various factors. We believe that availability of
blocks of business in the marketplace will continue in response to
ongoing industry consolidation, risk-based capital requirements
and other regulatory and rating agency concerns. We currently have
no plans or commitments to acquire any specific insurance business
or other material assets.

We have information systems and administrative capabilities
necessary to add additional blocks of business without a
proportional increase in operating expenses. In addition, we have
developed management techniques for reducing or eliminating
the expenses of the companies we acquire through the consolidation
of their operations.  Such techniques include reduction or
elimination of overhead, including the acquired company's
management, staff and home office, elimination of marketing
expenses and, where appropriate, the substitution of Standard
Life's distribution network for the acquired company's current
distribution system, and the conversion of the acquired company's
data processing operations to our system.

We typically acquire companies or blocks of business through the
purchase or exchange of shares.  This method is also
used for assumption reinsurance transactions.  Any future
acquisitions may be subject to certain regulatory approvals,
policyholder consents and stockholder approval.

Competition

The life insurance industry is highly competitive and consists of
a large number of both stock and mutual insurance
companies, many of which have substantially greater financial
resources, broader and more diversified product lines and larger
staffs than those possessed by Standard Management.  According to
the American Council of Life Insurers, there were approximately
1,500 life insurance companies in the United States, which may
offer insurance products similar to ours. Competition within the
life insurance industry occurs on the basis of, among other
things, 1) product features such as price and interest rates, 2)
perceived financial stability of the insurer, 3) policyholder
service, 4) name recognition and 5) ratings assigned by insurance
rating organizations.

We must also compete with other insurers to attract and retain the
allegiance of agents. We believe that competition
centers more on the strength of the agent relationship rather than
on the identity of the insurer's name recognition to the customer.
We offer competitive products, competitive commission structures,
internet based agent services, prompt policy issuance and
responsive policyholder service and believe we are successful in
attracting and retaining agents.

Competition also is encountered from the expanding number of
banks, securities brokerage firms and other financial
intermediaries which are marketing insurance products and which
offer competing products such as savings accounts and securities.
We began distributing annuities through financial institutions as
a result of the acquisition of Savers Marketing in March 1998.
The recent passage, by Congress, of the Gramm-Leach-Bliley
Financial Services Modernization Act  ("GLB Act") has expanded
competitive opportunities for non-insurance financial services
companies.  The full effects of the GLB Act on our competition
cannot be predicted with certainty at this time.

The unit-linked life insurance market in Europe is highly
competitive and consists of many companies domiciled in the
United Kingdom and its offshore centers, as well as many companies
in Luxembourg and Ireland, which sell products similar to
those of Standard Management International.  Standard Management
International is able to develop its share of a competitive
market by developing strong relationships with investment
advisors, brokers, accountants and tax attorneys.

Financial institutions, school districts, marketing companies,
agents who market insurance products and policyholders
use the ratings of an insurer as one factor in determining which
insurer's annuity to market or purchase. Standard Life and Dixie
Life have a rating of B++ and B, respectively, by A.M. Best.  A
rating of B++ is assigned by A.M. Best to companies that, in their
opinion, have achieved very good overall performance when compared
to the standards established by A.M. Best, and have a good
ability to meet their obligations to policyholders over a long
period of time.  A rating of "B" is assigned by A.M. Best to
companies that, in their opinion, have achieved good overall
performance when compared to the standards established by A.M.
Best. According to A.M. Best, these companies generally have an
adequate ability to meet their obligations to policyholders, but
their financial strength is vulnerable to unfavorable changes in
underwriting or economic conditions. In evaluating a company's
financial and operating performance, A.M. Best reviews the
company's profitability, leverage and liquidity as well as the
company's book of business, the adequacy and soundness of its
reinsurance, the quality and estimated market value of its assets,
the adequacy of its reserves and the experience and competence of
its management. A.M. Best's ratings are based upon factors
relevant to policyholders, agents, insurance brokers and
intermediaries and are not directed to the protection of
investors. Generally, rating agencies base their ratings on
information furnished to them by the issuer and on their own
investigations, studies and assumptions by the rating agencies.
There is no assurance that any particular rating will continue for
any given period of time or that it will not be changed or
withdrawn entirely if, in the judgment of the rating
agency, circumstances so warrant. Although a higher rating by
A.M. Best or another insurance rating organization could have a
favorable effect on Standard Life's business, management believes
that it is able to compete on the basis of their competitive
crediting rates, asset quality, strong relations with its
independent agents and the quality of service to its
policyholders.

Federal Income Taxation

The products marketed and issued by Standard Life generally
provide the policyholder with an income tax advantage,
as compared to other saving investments such as certificates of
deposit and bonds, in that income taxation on the increase in
value of the product is deferred until receipt by the
policyholder. With other savings investments, the increase in
value is taxed as earned. Life insurance benefits that accrue
prior to the death of the policyholder, and annuity benefits, are
generally not taxable until paid, and life insurance death
benefits are generally exempt from income tax. The tax advantage
for life insurance and annuity products is provided in the
Internal Revenue Code of 1986, as amended, and is generally
followed in all states and other U.S. taxing jurisdictions.
Accordingly, it is subject to change by Congress and the
legislatures of the respective taxing jurisdictions.

We file a consolidated return with our non insurance subsidiaries
for federal income tax purposes and, as of December 31, 2001, have
net operating loss carryforwards of approximately $4.6 million,
which expire from 2008 to 2018.

In addition, Standard Life and Dixie Life file a consolidated
return for federal income tax purposes and at December 31,
2001, have a net capital loss carryforward of approximately $7.2
million, which expires in 2006.  These carryforwards will be
available to reduce taxable capital gains in the Standard Life
consolidated return.

Standard Management International is a Luxembourg 1929 holding
company, and has a preferential tax status.  Standard
Management International is completely exempt from corporate
income tax, municipal business tax and net capital tax, but is
subject to "taxe d'abonnement", levied annually at a rate of 0.2%
of the paid up capital.  Premier Life (Bermuda) is exempt from
income tax until March 2016 pursuant to a decree from the Minister
of Finance. Premier Life (Luxembourg) is subject to
Luxembourg income taxation (statutory corporate rate of 36% in
2001 and 2000) and a capital tax of approximately 0.5% of its net
equity. At December 31, 2001, Premier Life (Luxembourg) had
accumulated corporate income tax loss carryforwards of
approximately $1.4 million, all of which may be carried forward
indefinitely. To the extent that such income is taxable under U.S.
law, it will be included in our consolidated return.

Effective January 1, 2000, we entered into a tax sharing agreement
with Savers Marketing and Standard Management
International that allocates the consolidated federal income tax
liability.  In 2001, Savers Marketing paid $.4 million and
Standard Management International recovered $.1 million in
accordance with this agreement.  In 2000, Savers Marketing and
Standard Management International paid Standard Management $.3
million and $1.0 million, respectively, in accordance with this
agreement.

Inflation

A primary direct effect of inflation is an increase to our
operating expenses. A large portion of our operating expenses
consists of salaries, which are subject to wage increases at least
partly affected by the rate of inflation.

The rate of inflation also affects us indirectly.  To the extent
that the government's economic policy to control the level
of inflation results in changes in our interest rates, our new
sales of annuity products, investment income and withdrawal rates
are affected.  Changes in the level of interest rates also have an
effect on interest spreads, as investment earnings are reinvested.

Foreign Operations and Currency Risk

Standard Management International policyholders invest in assets
denominated in a broad range of currencies.
Policyholders effectively bear the currency risk, if any, as these
investments are matched by policyholder separate account
liabilities. Therefore, their investment and currency risk is
limited to premiums they have paid. Policyholders are not
permitted to invest directly in options, futures and derivatives.

We are subject to currency related earnings variability
because separate account management fees are paid to Standard
Management International in local currencies and because their
operations are generally transacted in Euros. The value of fee
income and the cost of Standard Management International's
operating expenses are subject to exchange rate fluctuation when
converted to U.S. dollar denominated financial statements.

Standard Management International could be exposed to currency
fluctuations if currencies within the conventional
investment portfolio or certain actuarial reserves are mismatched.
The assets and liabilities of this portfolio and the reserves are
continually matched by the company and at regular intervals by an
independent actuary. In addition, Premier Life's (Luxembourg)
stockholder's equity is denominated in Euros. Premier Life
(Luxembourg) does not hedge its foreign currency translation risk
because its stockholder's equity will remain in Euros for the
foreseeable future and no significant realized foreign exchange
gains or losses are anticipated. At December 31, 2001, there is a
$2.2 million unrealized loss from foreign currency translation.

Due to the nature of unit-linked products issued by Standard
Management International, which represent virtually all of
their portfolio, the investment risk rests with the policyholder.
Investment risk for Standard Management International exists where
investment decisions are made with respect to the remaining
general account business and for the assets backing certain
actuarial and regulatory reserves. The investments underlying
these liabilities mostly represent short term investments and
fixed maturity securities which are normally bought and/or
disposed of only on the advice of independent consulting actuaries
who perform an annual exercise comparing anticipated cash flows on
the insurance portfolio with the cash flows from the fixed
maturity securities. Any resulting foreign currency mismatches are
then covered by buying and/or selling the securities as
appropriate.

Regulatory Factors

Our insurance subsidiaries are subject to significant regulation
by the insurance regulatory authorities in the jurisdictions
in which they are domiciled and the insurance regulatory bodies in
the other jurisdictions in which they are licensed to sell
insurance. The purpose of such regulation is primarily to ensure
the financial stability of insurance companies and to provide
safeguards for policyholders rather than to protect the interest
of stockholders or debtholders. The insurance laws of various
jurisdictions establish regulatory agencies with broad
administrative powers relating to 1) the licensing of insurers and
their agents, 2) the regulation of trade practices, 3) management
agreements, 4) the types of permitted investments and maximum
concentration, 5) deposits of securities, 6) the form and content
of financial statements, 7) premiums charged by insurance
companies, 8) sales literature and insurance policies, 9)
accounting practices and the maintenance of specified reserves and
10) capital and surplus. Our insurance subsidiaries are required
to file detailed periodic financial reports with supervisory
agencies in certain jurisdictions.

Most states have also enacted legislation regulating insurance
holding company activities including acquisitions,
extraordinary dividends, terms of surplus debentures, terms of
affiliate transactions and other related matters. The insurance
holding company laws and regulations vary by state, but generally
require an insurance holding company and its insurance company
subsidiaries licensed to do business in the state to register and
file certain reports with the regulatory authorities, including
information concerning capital structure, ownership, financial
condition, certain intercompany transactions and general business
operations. State holding company laws also require prior notice
or regulatory agency approval of certain material intercompany
transfers of assets within the holding company structure.
Recently a number of state regulators have considered or have
enacted legislation proposing that change, and in many cases
increase, the authority of state agencies to regulate insurance
companies and holding companies.  For additional information on
state laws regulating insurance company subsidiaries, see
"Management's Discussion and Analysis of Financial Condition and
Results of Operations - Liquidity and Capital Resources" and Note
12 to our consolidated financial statements.

Under Indiana insurance law, Standard Life may not enter into
certain transactions, including management agreements
and service contracts, with members of its insurance holding
company system, including Standard Management, unless Standard
Life has notified the Indiana Department of Insurance of its
intention to enter into these transactions and the Indiana
Department of Insurance has not disapproved of them within the
period specified by Indiana law. Among other things, these
transactions are subject to the requirement that their terms and
charges or fees for services performed be fair and reasonable.

The Indiana insurance laws and regulations require that the
statutory surplus of Standard Life following any dividend or
distribution be reasonable in relation to its outstanding
liabilities and adequate to its financial needs. The Indiana
Department of Insurance may bring an action to enjoin or rescind
the payment of a dividend or distribution by Standard Life that
would cause its statutory surplus to be unreasonable or inadequate
under this requirement.

Most states, including Indiana, require administrative approval of
the acquisition of 10% or more of the outstanding
shares of an insurance company incorporated in the state or the
acquisition of 10% or more of the outstanding shares of an
insurance holding company whose insurance subsidiary is
incorporated in the state. The request for approval must be
accompanied by detailed information concerning the acquiring
parties and the plan of acquisition. The acquisition of 10% of
these shares is generally deemed to be the acquisition of
"control" for the purpose of the holding company statutes.
However, in many states the insurance authorities may find that
"control" in fact does or does not exist in circumstances in which
a person owns or controls either a lesser or a greater amount of
securities.

In some instances state regulatory authorities require deposits of
assets for the protection of either policyholders in those
states or for all policyholders. At December 31, 2001, securities
of $8.8 million or approximately 1% of the book value of our U.S.
insurance subsidiaries' invested assets were on deposit with
various state treasurers or custodians. These deposits must
consist of securities that comply with the standards that the
particular state has established.  Fixed maturity securities of
$.7 million, short-term investments of $2.2 million and account
assets of Standard Management International were held by a
custodian bank approved by the Luxembourg regulatory authorities
to comply with local insurance laws at December 31, 2001.

In recent years, the National Association of Insurance
Commissioners, or NAIC, and state insurance regulators have
examined existing laws and regulations and their application to
insurance companies. This examination has focused on 1) insurance
company investment and solvency issues, 2) risk-based capital
guidelines, 3) assumption reinsurance, 4) interpretations of
existing laws, 5) the development of new laws, 6) the
interpretation of nonstatutory guidelines, 7) the standardization
of statutory accounting rules and 8) the circumstances under which
dividends may be paid. The NAIC has encouraged states to adopt
model NAIC laws on specific topics such as holding company
regulations and the definition of extraordinary dividends. We are
unable to predict the future impact of changing state regulation
on our operations.

The NAIC, as well as Indiana and Mississippi, have each adopted
Risk-Based Capital ("RBC") requirements for life and
health insurance companies to evaluate the adequacy of statutory
capital and surplus in relation to investment and insurance risks.
State insurance regulators use the RBC requirements as regulatory
tools only, which aid in the identification of insurance companies
that could potentially lack sufficient capital.  Regulatory
compliance is determined by a ratio (the "RBC Ratio") of the
company's regulatory total adjusted capital to its authorized
control level RBC.  The two components of the RBC Ratio are
defined by the NAIC.  The RBC ratios that require corrective
action are as follows:



     Level          RBC Ratio          Corrective Action

Company Action       1.5 - 2     Company is required to submit a
                                 plan to improve its RBC Ratio

Regulatory Action    1 - 1.5     Regulators will order corrective
                                 actions

Authorized Control   0.7 - 1     Regulators are authorized to take
                                 control of the company

Mandatory Control  less than 0.7 Regulators must take over the
                                 company

At December 31, 2001, the RBC Ratios of Standard Life and Dixie
Life were both at least two times greater than the
levels at which company action is required.  If these RBC Ratios
should decline in the future, our subsidiaries might be subject to
increased regulatory supervision and decreased ability to pay
dividends, management fees and surplus debenture interest to
Standard Management.

On the basis of annual statutory statements filed with state
regulators, the NAIC calculates twelve financial ratios to assist
state regulators in monitoring the financial condition of
insurance companies.  A "usual range" of results for each ratio is
used as a benchmark.  In the past, variances in certain ratios of
our insurance subsidiaries have resulted in inquiries from
insurance departments to which we have responded.  Such inquiries
did not lead to any restrictions affecting our operations.

We attempt to manage our assets and liabilities so that income and
principal payments received from investments are
adequate to meet the cash flow requirements of its policyholder
liabilities. The cash flows of our liabilities are affected by
actual maturities, surrender experience and credited interest
rates. We periodically perform cash flow studies under various
interest rate scenarios to evaluate the adequacy of expected cash
flows from our assets to meet the expected cash requirements of
our liabilities. We utilize these studies to determine if it is
necessary to lengthen or shorten the average life and duration of
our investment portfolio. Because of the significant uncertainties
involved in the estimation of asset and liability cash flows,
there can be no assurance that we will be able to effectively
manage the relationship between our asset and liability cash
flows.

The statutory filings of our insurance subsidiaries require
classifications of investments and the establishment of an asset
valuation reserve, designed to stabilize a company's statutory
surplus against fluctuations in the market value of stocks and
bonds, according to regulations prescribed by the NAIC. The asset
valuation reserve consists of two main components: a "default
component" to provide for future credit-related losses on fixed
income investments and an "equity component" to provide for
losses on all types of equity investments, including real estate.
The NAIC requires an additional reserve, called the  interest
maintenance reserve, which consists of the portion of realized
capital gains and losses from the sale of fixed income securities
attributable to changes in interest rates. The interest
maintenance reserve is required to be amortized against earnings
on a basis reflecting the remaining period to maturity of the
fixed income securities sold. These regulations affect the ability
of our insurance subsidiaries to reflect investment gains and
losses in current period statutory earnings and surplus.

The amounts related to Asset Valuation Reserve and Interest
Maintenance Reserve for the insurance subsidiaries at
December 31, 2001 are summarized as follows (in thousands):

			                 Maximum
             Asset               Asset	           Interest
       Valuation Reserve  Valuation Reserve  Maintenance Reserve

Standard Life	$3,542           $7,976              $4,246
Dixie Life	   599	          656	               188

The annual addition to the asset valuation reserve for 2001 is 20%
of the maximum reserve over the accumulated balance.
If the calculated reserve with current year additions exceeds the
maximum reserve amount, the reserve is reduced to the maximum
amount. For the year ended December 31, 2001, our U.S.
subsidiaries each made the required contribution to the asset
valuation reserve.

Most jurisdictions require insurance companies to participate in
guaranty funds designed to cover claims against insolvent
insurers. Insurers authorized to transact business in these
jurisdictions are generally subject to assessments based on annual
direct premiums written in that jurisdiction to pay such claims,
if any. These assessments may be deferred or forgiven under most
guaranty laws if they would threaten an insurer's financial
strength and, in certain instances, may be offset against future
state premium taxes. The incurrence and amount of such assessments
have increased in recent years and may increase further in future
years.  The likelihood and amount of all future assessments cannot
be reasonably estimated and are beyond our control.

As part of their routine regulatory oversight process,
approximately once every three to five years, state insurance
departments conduct periodic detailed examinations of the books,
records and accounts of insurance companies domiciled in their
states. Standard Life had an examination during 2001 for the five-
year period ended December 31, 2000 and Dixie Life had an
examination during 2001 for the three-year period ended December
31, 2000. These final examination reports are due to be issued
in 2002.

The federal government does not directly regulate the insurance
business.  However, federal legislation and administrative
policies in several areas, including pension regulation, age and
sex discrimination, financial services regulation and federal
taxation, do affect the insurance business.  In addition,
legislation has been introduced from time to time in recent years,
which, if enacted, could result in the federal government assuming
a more direct role in the regulation of the insurance industry.
The recently passed GLB Act has left the currently existing regime
of state insurance regulation largely intact; however, more
comprehensive federal legislation in this area is still being
actively considered by Congress.

Employees

As of March 15, 2002, we have 164 employees which were comprised
of 128 employees domestically and 36 employees
internationally.  We believe our future success will depend, in
part, on our ability to attract and retain highly-skilled
technical, marketing, support and management personnel. We believe
we have excellent relations with our employees.

Item 2.  Properties

Domestic Operations. In May 2001 we completed the construction  of
a new domestic home office of 58,000 square feet
at 10689 North Pennsylvania Street, Indianapolis, Indiana.  In
December 2001, we signed a promissory note and mortgage due
December 31, 2011 in the principal amount of $6.9 million to
finance the new home office building.  Approximately 46,000 square
feet of the building is leased to Standard Life pursuant to a
lease entered into on January 1, 2002.

We entered into a lease on March 31, 1997, for approximately
16,000 square feet in a warehouse located at 2525 North
Shadeland, Indianapolis, Indiana which expires on July 1, 2002.
This lease will either be renegotiated or a new lease will be
entered into in 2002.

Savers Marketing leases approximately 6,000 square feet in an
office building located at 8064 North Point Boulevard,
Winston-Salem, North Carolina, under the terms of a lease, which
expires on March 31, 2002. This lease is scheduled to be
renegotiated by April 1, 2002 under approximately the same terms
as the prior lease.

International Operations.  Standard Management International
entered into a lease on November 17, 1997 for
approximately 4,500 square feet in an office building located at
13A, rue de Bitbourg, L-1273 Luxembourg-Hamm, Grand Duchy
of Luxembourg which expires on November 16, 2003.

Item 3.  Legal Proceedings

We are involved in various legal proceedings in the normal course
of business.  In most cases, these proceedings involve
claims under insurance policies or other contracts.  The outcome
of these legal proceedings are not expected to have a material
adverse effect on the consolidated financial position, liquidity,
or future results of our operations based on our current
understanding of the relevant facts and law.

Item 4.  Submission of Matters to a Vote of Securities Holders

At our Annual Meeting of Stockholders held on June 19, 2001, the
following individuals were elected to the Board of
Directors:


                                       Shares For  Shares Withheld
John J. Dillon	                         5,482,041       149,687
Ronald D. Hunter	                    5,341,218       290,510
Edward T. Stahl	                    5,385,216       246,512

A total of 5,631,728 shares were present in person or by proxy at
the Annual Meeting of Stockholders.

Executive Officers

The following is information concerning our executive
officers:

Ronald D. Hunter, 50, Chairman of the Board, Chief Executive
Officer and President
* Chairman of the Board and Chief Executive Officer of Standard
Life since 1987
* Held management and sales positions with:
Conseco, Inc from 1981 to 1986
Aetna Life & Casualty Company from 1978 to 1981

Raymond J. Ohlson, 51, Executive Vice President, Chief Marketing
Officer and Director
* President of Standard Life since 1993
* Earned CLU designation in 1980
* Life member of the Million Dollar Round Table

P.B. (Pete) Pheffer, CPA, 51, Executive Vice President, Chief
Financial Officer and Director
* Senior Vice President -- Chief Financial Officer and Treasurer
of Jackson National Life Insurance Company from 1994 to 1996
* Senior Vice President -- Chief Financial Officer of Kemper Life
Insurance Companies from 1992 to 1994
* Received MBA from the University of Chicago in 1988

Stephen M. Coons, 61, Executive Vice President, General Counsel,
Secretary and Director
* Counsel to the law firm of Coons, Maddox & Koeller from 1993 to
1995
* Partner with the law firm of Coons & Saint prior to 1993
* Indiana Securities Commissioner from 1978 to 1983
* Received J.D. from Indiana University in 1971

Edward T. Stahl, 55, Executive Vice President, Chief
Administrative Officer and Director
* Secretary of Standard Life since 1993
* President and Chief Operations Officer of Standard Life from
1988 to 1993
* Director of Standard Life since 1987
* Served in various capacities in the insurance industry since
1966 and is a member of several insurance associations

John J. Dillon, 42, Executive Vice President, Chief Operating
Officer and Director
* Business Consultant from 2000 to 2001
* Chief Administrative Officer of Analytical Surveys, Inc. from
1997 to 2000
* Director of the Hoosier Lottery from 1993 to 1997
* Insurance Commissioner from 1989 to 1991

Brett A. Pheffer(1), 41, Executive Vice President - Corporate
Business Development
* Chief Executive Officer of Mahomed Sales and Warehouse from 1993
to 2001
* General Manager of Monarch Beverage Company, Inc. from 1986 to
1993

(1) P.B. (Pete) Pheffer and Brett A. Pheffer are siblings


PART II

Item 5.	Market for our Common Stock and Related Stockholder
Matters

Our Common Stock trades on NASDAQ under the symbol "SMAN". The
following table sets forth, for the periods
indicated, the range of the high and low sales prices of our
Common Stock as reported by NASDAQ.  We have never paid cash
dividends on our Common Stock. At the close of business on March
15, 2002 there were approximately 3,000 holders of record
of the outstanding shares of our Common Stock. Although our Common
Stock is traded on NASDAQ, no assurance can be given
as to the future price of or the markets for the stock.


                                         Common Stock
                                       High        Low
2001
  Quarter ended March 31, 2001         4.625	  2.813
  Quarter ended June 30, 2001          6.980	  3.700
  Quarter ended September 30, 2001	    6.950	  4.350
  Quarter ended December 31, 2001	    6.950	  4.000
2000
  Quarter ended March 31, 2000	    5.250	  4.188
  Quarter ended June 30, 2000	         4.813	  3.063
  Quarter ended September 30, 2000	    4.000	  2.750
  Quarter ended December 31, 2000	    4.000	  2.938


Item 6.	Selected Historical Financial Data (a)
(Dollars in Thousands, Except Per Share Amounts and Shares
Outstanding)

The following historical financial data was derived from our
audited consolidated financial statements.  This historical
financial data should be read in conjunction with "Management's
Discussion and Analysis of Financial Condition and Results of
Operations" and our Consolidated Financial Statements and related
Notes.

                              Year Ended December 31
                      2001	  2000	 1999      1998   1997
STATEMENT OF
OPERATIONS DATA:

Premium income		$ 9,476   $ 9,474  $10,381  $14,479(d)   7,100
Investment activity
  Net investment
   income            59,000    50,776   43,612    33,589   29,197
  Call option gains
   (losses)          (5,906)   (7,603)   1,209       632       --
  Net realized
   investment gains
   (losses)	     (11,134)   (4,492)      78       353      396
Total revenues		 75,356	 70,067   70,254    63,275   46,855
Interest expense and
 financing costs	  3,492     3,417    3,385     2,955    2,381
Total benefits and
 expenses			 73,566	 63,663   62,856    56,964   43,593
Income before income
 taxes and
 extraordinary gain
 (loss)		  	  1,790	  6,404    7,398     6,311    3,262
Net income		  1,780	  5,267    5,272	 4,681    2,645


PER SHARE DATA:
Net income	         $.23       $.68      $.69       $.68      $.54
Net income, assuming
 dilution			    .23       .66      .65	   .62      .48
Book value per
 common share		  9.30	  8.34    6.85     8.64    8.88

Weighted average
 common shares
 outstanding,
 assuming
 dilution        7,765,378 9,183,949 9,553,731 9,363,763 5,591,217
Common shares
 outstanding	  7,546,493 7,545,156 7,785,156 7,641,454 4,876,490

COVERAGE RATIO (b):

Earnings to fixed
 charges              1.1X      1.2X      1.2X      1.3X      1.2X
Earnings to fixed
 charges, excluding
 policyholder
 interest 		  1.5X      2.5X      2.8X      3.0X      2.4X

BALANCE SHEET DATA
 (at year end):
Invested assets    $961,229  $754,839 $ 648,503  $592,123 $398,782
Assets held in
 separate accounts  401,097   520,439   319,973   190,246  148,064
Total assets	   1,607,653 1,470,457 1,150,977   956,150  668,992
Mortgage payable      6,900        --        --        --       --
Notes payable   	 19,100    31,500    34,500    35,000   26,141
Total liabilities 1,516,764 1,401,028 1,091,087   883,578  625,679
Trust preferred
 securities          20,700        --       --         --       --
Preferred stock	     --     6,530    6,530      6,530       --
Shareholders' equity 70,189    62,899   53,360     66,042   43,313

OTHER DATA:
Operating income (c)  7,329     7,333    5,221      4,448    2,384
Operating cash flows  7,990       935    2,853        207    7,696


Notes to Selected Historical Financial Data
(Dollars in Thousands, Except Per Share Amounts)


(a)	Comparison of consolidated financial information is
significantly affected by the acquisitions of  Savers Life on
March 12, 1998 and Midwestern Life on October 30, 1998.

(b)	The ratio of earnings to fixed charges is calculated by
dividing earnings (income before federal income taxes,
extraordinary loss and preferred stock dividends plus interest
expense and policyholder interest) by fixed charges (interest
expense on mortgage payable, notes payable and trust preferred
securities, dividends on preferred stock and policyholder
interest). The "Earnings to fixed charges, excluding policyholder
interest" ratios do not include interest credited to policyholder
accounts of  $30.2 million, $21.3 million, $25.7 million, $19.8
million and $16.3 million for the years ended December
31, 2001, 2000, 1999, 1998 and 1997, respectively.  "Earnings to
fixed charges, excluding policyholder interest" may not
be comparable to similarly titled measures used by other
companies.

(c)	Operating income is commonly used as a meaningful measure of
reporting results as a supplemental disclosure to net
income.  Operating income is not a GAAP measure of performance and
may not be comparable to similarly titled
measures used by other companies.  Operating income represents net
income before 1) extraordinary gains (losses), and
2) net realized investment gains (losses) (less related income
taxes (benefits) and amortization).  Operating income should
be reviewed in conjunction with net income and cash flow
information included elsewhere in this report.

(d)	Includes Medicare supplement premiums of $6.0 million related
to the Savers Life acquisition.  This business was sold
effective July 1, 1998.

Item 7.	Management's Discussion and Analysis of Financial
Condition and Results of Operations

The following discussion highlights the principal factors
affecting the results of our operations and the significant
changes in our balance sheet items on a consolidated basis for the
periods listed, as well as liquidity and capital resources. This
discussion should be read in conjunction with the accompanying
Consolidated Financial Statements, related Notes and selected
historical financial data.

Forward-looking Statements

All statements, trend analyses, and other information contained in
this Annual Report on Form 10-K or any document
incorporated by reference herein relative to markets for our
products and trends in our operations or financial results, as
well as other statements including words such as "anticipate",
"believe", "plan", "estimate", "expect", "intend" and other
similar expressions, constitute forward-looking statements under
the Private Securities Litigation Reform Act of 1995. These
forward-looking statements are subject to known and unknown risks,
uncertainties and other factors, which may cause actual results to
be materially different from those contemplated by the forward-
looking statements.  Such factors include, but are not limited to:

* General economic conditions and other factors, including
prevailing interest rate levels, and stock market performance,
which may affect our ability to sell products, the market value of
our investments and the lapse rate and profitability of
our policies.

* Our ability to achieve anticipated levels of operational
efficiencies at recently acquired companies, as well as through
other cost-saving initiatives.

* Customer response to new products, distribution channels and
marketing initiatives.

* Mortality, morbidity and other factors which may affect the
profitability of our insurance products.

* Changes in the federal income tax laws and regulation which may
affect the relative tax advantages of some of our
products.

* Increasing competition in the sale of our products.

* Regulatory changes or actions, including those relating to
regulation of financial services affecting bank sales and
underwriting of insurance products, regulation of the sale,
underwriting and pricing of insurance products.

* The availability and terms of future acquisitions.

* The risk factors or uncertainties listed from time to time in
any document incorporated by reference herein.

Product Profitability

	U.S. Product Profitability. The long-term profitability of
life insurance and annuity products depends on the accuracy
of the actuarial assumptions that underlie the pricing of such
products. Actuarial calculations for such insurance products, and
the
ultimate profitability of such products, are based on four major
factors: 1) persistency, 2) mortality, 3) return on cash invested
by the insurer during the life of the policy and 4) expenses of
acquiring and administering the policies.

	Interest spreads represent a major profit source on interest
sensitive life and annuity products, so margins on these
products are sensitive to interest rate fluctuations. In general,
we are able to maintain spreads by adjusting credited interest
rates for changes in our earned rates, subject to competitive and
timing constraints. However, there are corollary effects of
interest rate changes.

	Rising interest rates result in a decline in the market value
of assets, and also tend to result in increased policyholder
surrenders as other investment options become relatively more
attractive. The effect of increased surrenders is to reduce
earnings over the long term (current period earnings effect may
vary depending on the level of surrender charges and DAC/PVP
assets). In addition, increasing interest rates give rise to
disintermediation risk, the risk that assets must be sold at
depressed values in order to fund increased surrender payments.
This risk is mitigated by properly matching assets and
liabilities.

	Declining interest rates generally have little immediate
effect on our investment earnings rates. Over time, as we invest
positive cash flows at lower rates, our earned rates decline. In
such an environment, we attempt to adjust credited interest rates
accordingly, subject to competitive pressures. In most situations,
this action allows us to maintain our margins. However, a
significant decline in the yield on our investments could
adversely affect our results of operations and financial
condition.

The average expected remaining life of Standard Life's traditional
life and annuity business in force at December 31, 2001
was 6.9 years. This calculation was determined based upon our
actuarial models and assumptions as to expected persistency and
mortality. Persistency is the extent to which insurance policies
sold are maintained by the insured. The persistency of life
insurance and annuity products is a critical element of their
profitability. However, a surrender charge often applies in the
early contract years and declines to zero over time.

Policyholders sometimes do not pay premiums, thus causing their
policies to lapse. For the years 2001, 2000 and 1999
Standard Life experienced total policy lapses, excluding
surrenders, of 3.7%, 5.7% and 3.6% of total policies in force at
December 31 of each year, respectively.

International Product Profitability. Margins on our international
unit-linked products are driven by the relationship
between fees we collect on the products and our costs to sell and
administer those products. Fee amounts are largely related to
separate account asset values. In a declining equity environment,
as we experienced in 2001, separate account fee income declines
along with the asset values, resulting in lower margins.
Conversely, as global equity values increase, separate account
fees and margins increase as well.

	Present Value of Future Profits. In accordance with industry
practice, when we purchase a block of existing insurance
business, we assign a portion of the purchase price, called the
present value of future profits ("PVP"), as the pre-tax value of
the business acquired.  The asset is the discounted value of
future cash flows arising from the existing block of business.
The discount rate used is based upon many elements, such as yields
generated on similar business, our cost of capital and the
interest rate environment as of the purchase date.  Discount rates
used in determining our PVP assets range from 12.45% to 18.00%.

	After purchase, amortization of the asset occurs in
proportion to profits emerging from the purchased policies.  The
asset is amortized over the expected life of the block of
business.  The percentages of expected net amortization of the
beginning balance of the total PVP asset as of December 31, 2001
are expected to be between 8% and 10% in each of the years 2002
through 2006.

	Deferred Acquisition Costs. Insurance policies issued after
the purchase date of a company will generate significant costs
that vary directly with and relate to the acquisition of the new
business.  Under GAAP accounting rules, these acquisition costs
on new policies are to be capitalized and recorded as deferred
acquisition costs ("DAC").  For interest sensitive life and
annuity products, the DAC asset is amortized in proportion to
estimated gross profits over the life of the contract.  Virtually
all of our DAC is a result of writing annuity products.

Amortization of DAC related to operations was $10.7 million, $8.7
million and $4.6 million for the years ended December
31, 2001, 2000 and 1999, respectively.  The increase in current
year amortization expense resulted primarily from the emergence
of gross profits from business sold in recent years.  Future
expected amortization of DAC, assuming no new business after
December 31, 2001 and current assumptions, is as follows (in
thousands):

                      2002     2003     2004     2005     2006

Gross amortization    $17,769  $17,393  $15,337  $13,222  $11,237
Interest accumulation   4,996	   3,891    2,982    2,334    1,861
Net amortization	  $12,773	 $13,502	$12,355  $10,888  $ 9,376

Variances Between Actual and Expected Profits.  Actual experience
on purchased and produced insurance may vary from
projections due to differences in renewal premiums collected,
investment spreads, mortality costs, persistency, administrative
costs and other factors. Variances from original projections,
whether positive or negative, are included in net income as they
occur. To the extent that these variances indicate that future
experience will differ from the estimated profits reflected in the
capitalization and amortization of the PVP and DAC assets, current
and future amortization rates may be adjusted.

Product Accounting

Accounting for Deferred Annuities and Universal and Interest-
Sensitive Life Products.  We primarily account for our
annuity, universal and interest-sensitive life policy deposits in
accordance with Statement of Financial Accounting Standards No. 97
("SFAS No. 97"), "Accounting and Reporting by Insurance
Enterprises for Certain Long-Duration Contracts and for Realized
Gains and Losses on the Sale of Investments."  Under SFAS No. 97,
a benefit reserve is established at the time of policy issuance
in an amount equal to the deposits received. Thereafter, the
benefit reserve is adjusted for any additional deposits, interest
credited and partial or complete withdrawals. Revenues for
annuities and universal and interest-sensitive life policies,
other than certain non-interest sensitive annuities, consist of
policy charges for surrenders and partial withdrawals, mortality
and administration, and investment income earned. These revenues
do not include the annuity, universal and interest-sensitive life
policy deposits. Expenses related to these products include
interest credited to policyowner account balances, operating costs
for policy administration, amortization of DAC and mortality costs
in excess of account balances.

Costs relating to the acquisition of new business, primarily
commissions paid to agents, which vary with and are directly
related to the production of new business, are deferred to the
extent that such costs are recoverable from future profit margins.
At the time of issuance, the acquisition expenses, approximately
11% of our initial annuity premium deposits and 119% of our
premiums from universal and interest-sensitive life products, are
capitalized as DAC. In accordance with SFAS No. 97, DAC with
interest is amortized over the lives of the policies in a constant
relationship to the present value of estimated future gross
profits.

	Accounting for Equity-Indexed Annuities. Revenues and
expenses for equity-indexed annuities are recognized in
accordance with the SFAS No. 97 model, described above. Policy
liabilities for equity-indexed annuities are computed in
accordance with SFAS No. 133 which requires that an equity-indexed
annuity liability be bifurcated into a "host contract" and a
"derivative contract".  The host contract liability is a book
value liability providing for the equity-indexed annuity policy's
guaranteed benefits. The derivative contract liability is a market
value liability providing for the equity-linked benefits available
in the policy. The derivative liability includes a liability for
equity-linked benefits accruing during the current contract year,
as well as liability amounts for future equity benefits which have
not yet been granted.

	Accounting for Traditional Life Products. Traditional life
insurance products are accounted as long-duration insurance
contracts in accordance with Statement of Financial Accounting
Standards No. 60 ("SFAS No. 60"), "Accounting and Reporting
by Insurance Enterprises". Under SFAS No. 60, benefit reserves are
actuarially calculated using the net level  reserve method.
Revenues consist of policy premiums and investment income on
assets supporting policy liabilities. Expenses consist of policy
benefits incurred, increases in policy liabilities, and operating
costs for policy administration, and amortization of DAC.

Costs related to the acquisition of new business, primarily
commissions paid to agents, which vary with and are directly
related to the production of new business, are deferred to the
extent that such costs are recoverable from future profit margins.
At the time of issuance, the acquisition expenses are capitalized
as DAC. In accordance with SFAS No. 60, DAC with interest is
amortized over the lives of the policies in a constant
relationship to policy premiums.

Accounting for Payout Annuities. Payout annuities with no
life contingent payments, which comprise the majority of our
payout annuities in force and the majority of new payout annuity
sales, are accounted as investment contracts in accordance with
FAS No. 97. Revenues consist of investment income, and expenses
consist of the imputed interest credits to policies as well as
operating costs for policy administration. An initial policy
liability is established as initial premium less acquisition
costs. The imputed credited rate is the rate which equates this
net premium to the guaranteed payments. After issue, the liability
changes by the amount of imputed interest credits and benefit
payments.

Payout annuities with payments contingent on the survival of
the annuitant are accounted as limited-payment contracts
in accordance with FAS No. 60, with revenue recognition, expense
recognition, and liabilities computed as described above for
traditional life products.

Accounting for Unit-linked Assurance Products. Separate account
income statements and balance sheets are maintained
for international unit-linked assurance products.  Separate
account investment income and investment gains and losses accrue
directly to unit-linked policyholder accounts. Revenue and expense
recognition for unit-linked products follows a SFAS No. 97
model, with fee income recorded as revenue, and administrative
expenses recorded as expense. Policy acquisition costs and revenue
from initial sales charges are deferred and amortized as DAC and
deferred revenue respectively.

Results of operations by segment for the three years ended
December 31, 2001:

The following tables and narratives summarize the results of our
operations by business segment:


                                    2001        2000		1999
                                       (Dollars in thousands)

Domestic operations	    		   $   6,955    $   5,440  $  6,054
International operations	            2,164        3,128     1,266

Consolidated operating income
  before income taxes 	            9,119        8,568     7,320
Applicable income taxes related
  to operating income	            1,790        1,235     2,099

    Consolidated operating income
      after taxes	                 7,329        7,333     5,221

Consolidated realized investment
  gains (losses) before
  income taxes (benefits)	      (7,329)      (2,164)       78
Applicable income taxes (benefits)
  related to realized
  investment gains (losses)	      (1,780)        (457)       27

    Consolidated realized
      investment gains (losses)
      after taxes (benefits)	      (5,549)      (1,707)       51

    Income before extraordinary
      loss				       1,780        5,626     5,272
    Extraordinary loss, net of
      $185 tax benefit	               --         (359)       --

    Net income	                  $   1,780   $    5,267  $  5,272

Consolidated Results and Analysis

	Our 2001 net income was $1.8 million, or 23 cents per diluted
share, down 65% per share over the comparable 2000
period.  The results for 2001 were impacted by 1) an increase in
the Company's effective tax rate resulting in $.6 million; 2) an
increase in net realized investment losses, less related
amortization and taxes, attributable to the sale of Enron bonds
and write-downs on the value of collateralized debt obligations
due to increased default rates from the economic slow down of $3.8
million; 3) litigation settlement costs of $.3 million, and 4)
reduced spread on interest sensitive products of $.4 million.
These above decreases in net income were somewhat offset by paid
life insurance claims, less related reserves, of $.9 million.  No
extraordinary losses occurred in the current year.

	Our 2000 net income was $5.3 million, or 66 cents per diluted
share, up 2% per share over the comparable 1999 period.
 The results for 2000 include increases for 1) net investment
spread, the difference between the investment income earned on our
investments less the interest we credit to our policyholders, of
$21.8 million compared to $19.1 million, 2) separate account
margin, separate account fees less related amortization, of $5.7
million compared to $2.8 million and 3) a lower marginal tax rate
due to the utilization of our net operating loss carryforwards.
These increases were offset by 1) paid life insurance claims less
related reserves of $6.0 million compared to $4.7 million, 2) net
realized investment losses less related amortization and taxes, of
$1.7 million, and 3) an extraordinary loss of $.4 million in the
2000 period.

Domestic operations:

                                         2001	   2000	  1999
                                       (Dollars in thousands)

Premiums and deposits collected:
  Traditional life	                 $   9,419 $    9,432 $ 10,281
  Deferred annuities                   178,238     94,699   98,678
  Equity-indexed annuities              67,159     73,122   59,348
  Single premium immediate annuities
    and other deposits	               76,435     27,802    5,872
  Universal and interest-sensitive
     Life                         	        641        866    1,778

  Subtotal - interest-sensitive and
    other financial products 	         322,473    196,489  165,676
       Total premiums and deposits
         collected	                 $ 331,892 $  205,921 $175,957

Statement of Operations:
Premium income 	                 $   9,419 $    9,432 $ 10,281
Policy income	                          7,721      8,204    6,826

       Total policy related income	     17,140     17,636   17,107

Net investment income	               58,539     50,279   43,167
Call option gains (losses)	          (5,906)    (7,603)   1,209
Fee and other income	                7,347      5,980    4,207

       Total revenues	               77,120     66,292   65,690

Benefits and claims 	                7,087     13,795   11,807
Interest credited to interest
  sensitive annuities and other
  financial products			     30,227     21,335   25,728
Amortization			                8,931      9,703    6,313
Commission expenses	                     9,262      1,918      735
Other operating expenses	               11,166     10,684   11,668
Interest expense and financing costs	 3,492      3,417    3,385

       Total benefits and expenses	     70,165     60,852   59,636

       Operating income before income
         taxes	                          6,955      5,440    6,054

Net realized investment gains (losses),
  net of related amortization	          (6,546)    (2,164)      78

       Income before income taxes	   $    409 $    3,276 $  6,132

Supplemental Information:
Number of annuity contracts in force	28,482     24,216   24,322
Interest-sensitive annuity and other
  financial products reserves,
  net of reinsurance ceded	        $926,539 $  695,475 $595,388
Number of life policies in force	     47,575     55,533   61,573
Life insurance in force, net of
  reinsurance ceded                 $744,569 $1,042,566 $1,367,533

General: Our domestic operations segment consists of revenues
earned and expenses incurred from our United States operations.
Our primary products include deferred annuities, equity-indexed
annuities and single premium immediate annuities.  The
profitability of this segment is primarily a function of net
investment spread (the difference between the investment income
earned on our investments less the interest we credit to our
policyholders), persistency of the in force business, mortality
experience and management of our operating expenses.

Premium deposits consist of deposits from our flexible premium
deferred annuities, equity-indexed annuities, single premium
immediate annuities and other financial products that do not
incorporate significant mortality features. For  GAAP, these
premium deposits are not shown as premium income in the income
statement.  A change in premium deposits in a single period does
not directly cause our operating income to change, although
continued increases or decreases in premiums may affect the growth
rate of assets on which investment spreads are earned.

* Premium deposits for 2001 increased  $126.0 million or 64%, to
$322.5 million. Deferred annuities increased $83.5
million or 88%, to $178.2 million.  Single premium immediate
annuities and other deposits increased $48.6 million or
175%, to $76.4 million.

* Premium deposits for 2000 increased $30.8 million or 19% to
$196.5 million. Single premium immediate annuities and
other deposits increased  $21.9 million to $27.8 million. Equity-
indexed annuities increased $13.8 million or 23% to $73.1
million.

The increase relates to 1) an expanded geographical presence, 2)
favorable agent retention, 3) enhanced presence in the single
premium immediate annuity market, 4) the development of an
interactive agent website and 5) an A.M. Best rating of B++ (Very
Good).

Premium income consists of premiums earned from 1) traditional
life products and 2) annuity products that incorporate significant
mortality features.

* Premium income for 2001 remained constant at $9.4 million.
Effective August 2001, we suspended the active marketing
of life products indefinitely, however we continue to manage our
in force life business.

* Premium income for 2000 decreased $.8 million or 8%, to $9.4
million, which is primarily the result of a decline in
ordinary life policies in force due to lapse and surrender.

Policy income represents 1) mortality income and administrative
fees earned on universal life products, and 2) surrender income
earned as a result of terminated universal life and annuity
policies.

* During 2001, policy income decreased $.5 million or 6%, to $7.7
million which includes a $.3 million decline in surrender
income.  Generally during a declining interest rate environment,
policyholders are less likely to terminate existing annuity
policies, therefore  resulting in less surrender income.

* During 2000, policy income increased $1.4 million or 20% to $8.2
million.  The increase primarily relates to $1.6 million
of surrender income received as a result of 1) reducing crediting
rates on certain flexible premium deferred annuity
products and 2) general market conditions, offset by 3) lower cost
of insurance income.

Net investment income includes interest earned on invested assets
and fluctuates with changes in 1) the amount of average invested
assets supporting insurance liabilities and 2) the average yield
earned on those invested assets.

*     During 2001, net investment income increased $8.3 million or
16% to $58.5 million. Average cash and invested assets,
at book value, increased by $158.0 million or 22% due to the
growth in insurance liabilities from annuity sales in recent
periods.

* During 2000, net investment income increased $7.1 million or 16%
to $50.3 million.  Average cash and invested assets,
at book value, increased by $95.7 million or 15% due to the growth
in insurance liabilities from annuity sales in recent
periods.

* The net investment yield earned on our average invested assets
was 7.14%, 7.26% and 7.13% for the years ended 2001,
2000 and 1999, respectively.  Investment yields fluctuate from
period to period and include changes in the general interest
rate environment.

See also "Call option losses" and  "Interest credited to interest
sensitive annuities and other financial products" for additional
information regarding the impact of our equity-indexed products.

Call option losses  relate to equity-indexed products which are
hedged with call options to limit risk against unusually high
crediting rates from favorable returns in the equity market.The
market value of these call options fluctuate from period to period
and are substantially offset by amounts credited to policyholder
account balances.

*    During 2001, call option losses decreased by $1.7 million or
22% to $5.9 million.

* During 2000, call option losses increased $8.8 million to ($7.6)
million compared to call option gains of $1.2 million in
1999.

Call option losses for the 2001 and 2000 periods were due to the
impact from changes in the market value of our call options as
a result of changes in the S & P 500 Index and the purchase of
additional options to support increased equity-indexed
liabilities.

Fee and other income consist of fee income related to servicing
unaffiliated blocks of business, experience refunds, and
commission
income.

* During 2001, fee and other income increased by $1.4 million or
23% to $7.3 million.  This increase includes commission
income from Savers Marketing of $6.2 million, an increase of $1.5
million compared to the 2000 period.

* During 2000, fee and other income increased $1.8 million or 42%,
to $6.0 million.  This increase includes 1) commission
income from Savers Marketing of $4.7 million, an increase of $1.5
million compared to the 1999 period and 2) $.3 million
of other income related to a recovery under a keyman insurance
policy.

Benefits and claims  include 1) mortality experience, 2) benefits
from other policies that incorporate significant mortality
features and 3) changes in future policy reserves.  Throughout our
history, we have experienced  both periods of higher and lower
benefit claims.  Such volatility is not uncommon in the life
insurance industry and, over extended periods of time, periods of
higher claim experience tend to offset periods of lower claim
experience.

* Benefits and claims in 2001 decreased by $6.7 million or 49% to
$7.1 million.  This decrease includes the impact from
single premium immediate annuity reserves of approximately $5.2
million, which are offset by a comparable increase in
commission expense and premium tax.  In addition, we experienced
favorable mortality of $.9 million compared to the
2000 period.

* Benefits and claims in 2000 increased $2.0 million or 17%, to
$13.8 million.  This increase includes 1) additional reserves
needed as a result of increased traditional life premiums and 2)
unfavorable mortality experience of $1.3 million compared
to the 1999 period.

See also "Commission expenses" and "Other operating expenses" for
additional information regarding the impact of our single
premium immediate annuities.

Interest credited to interest sensitive annuities and other
financial products  represents interest credited to insurance
liabilities of  the flexible premium deferred annuities, equity-
indexed annuities, single premium immediate annuities and other
financial products. This expense fluctuates with changes in 1) the
average interest-sensitive insurance liabilities, 2) the average
credited rate on those liabilities, 3) interest earned on invested
assets supporting equity-indexed products, 4) the market value
fluctuations of call options and 5) the impact of SFAS No. 133,
which is substantially offset by amortization.

* In 2001, interest credited increased $8.9 million or 42%, to
$30.2 million due to increased average interest sensitive
liabilities of $159.2 million or 25% compared to the 2000 period.
In addition, interest credited increased $3.7 million as
a result of market value changes of call options supporting our
equity-indexed products.

* In 2000, interest credited decreased $4.4 million or 17%, to
$21.3 million.  This decrease consists of a $7.6 million decline
in the market value of call options supporting equity-indexed
products.  This decrease was offset by increased interest
credited due to increased average interest sensitive liabilities
of $98.9 million or 20% for the period, including a $61.4
million increase from equity-indexed products.

* Our weighted average credited rate was 5.00%, 4.90% and 4.89%
for the years ended 2001, 2000 and 1999, respectively.

The increase in our weighted average crediting rate for 2001
is primarily due to the increased volume of new business
which tends to have higher crediting rates than renewal business.
Sales of interest sensitive products increased 64% compared to
the 2000 period.

Amortization includes 1) amortization related to the present value
of polices purchased from acquired insurance business, 2)
amortization of deferred acquisition costs related to capitalized
costs of insurance business sold and 3) amortization of goodwill
and organizational costs and 4) the impact of adopting SFAS No.
133.

* Amortization in 2001 decreased by $.7 million or 8% to $8.9
million. This decline relates to 1) lower amortization of $.7
million from our purchased insurance business, 2) $.4 million from
lower surrenders and 3) $.4 million as a result of
adopting FASB 133. These decreases were offset by $.7 million of
additional amortization related to annuity sales in
recent periods.

* Amortization in 2000 increased $3.4 million or 54%, to $9.7
million.  This increase relates to 1) additional amortization
of deferred acquisition costs, 2) increased business in force and
3) the recognition of additional profits for the period.
Additional profits were recognized from 1) the realization of
profits from increased annuity sales in recent periods and
2) the realization of profits from surrender income of deferred
annuities.

Commission expenses represent commission expenses, net of
deferrable amounts.

* During 2001, commission expenses increased $7.3 million to $9.3
million primarily due to $4.5 million of non-deferrable
commissions from increased single premium immediate annuity sales
of approximately $48.6 million compared to the 2000
period, and $1.1 million of additional commissions paid by Savers
Marketing due to increased sales.

* During 2000, commission expenses increased $1.2 million to $1.9
million primarily due to non-deferrable commissions from
increased single premium immediate annuity sales of approximately
$21.9 million, compared to the 1999 period.

Benefits and claims have been reduced by increased commission
expenses related to single premium immediate annuity sales in the
periods ending December 31, 2001 and 2000, respectively.

Other operating expenses consist of general operating expenses,
including salaries, net of deferrable amounts.

* In 2001, other operating expenses increased $.5 million or 5% to
$11.2 million.  This increase is primarily due to $.8
million of premium tax expense from increased sales of single
premium immediate annuities, and  litigation settlement
costs.

* In 2000, other operating expenses decreased $1.0 million or 8%,
to $10.7 million.  The decrease is due to continued
efficiencies achieved through the assimilation of recent
acquisitions.

Benefits and claims have been reduced by increased premium taxes
related to single premium immediate annuity sales for the
periods ending December 31, 2001 and 2000, respectively.

Interest expense and financing costs represent interest expense
incurred and the amortization of related debt issuance costs.

* In 2001, interest expense and financing costs increased by $.1
million to $3.5 million.  Average borrowings for the period
increased $1.6 million primarily due to the Trust Preferred
Offering completed in August 2001.

* In 2000, interest expense and financing costs remained at $3.4
million.  Average borrowings for the period declined $3.2
million, however, they were offset by an increased interest rate
for the period.

The weighted average interest rate for the 2001 and 2000 periods
was 10.47% and 10.76%, respectively.

Net realized investment gains (losses), net of related
amortization fluctuate from period to period and generally arise
when securities are sold in response to changes in the investment
environment.  Realized investment gains (losses) may affect the
timing of the amortization of deferred acquisition costs and the
amortization of the present value of future profits.

* Net realized investment losses, net of amortization, for 2001
were $6.5 million, which is reduced by $3.8 million of
deferred acquisition cost amortization. The majority of the loss
was attributable to the sale of Enron bonds and write-
downs on the value of collateralized debt obligations due to
increased default rates.  In addition, losses for the 2001
period included the write-off of an investment in an internet
based business.

* Net realized investment losses, net of amortization, for 2000
were $2.2 million, which is reduced by $2.3 million of
deferred acquisition cost amortization.  Approximately 64% of the
gross losses for 2000 are related to fixed maturity
securities that have a decline in fair value that is considered
other than temporary.  These securities are considered to be
in substantive default.

We maintain a high quality investment portfolio with 95% and 94%
of our fixed maturity securities classified as
investment grade securities in 2001 and 2000, respectively.

International operations:

                                      2001	    2000	   1999
                                       (Dollars in thousands)

Premiums and deposits collected:
  Traditional life			      $     57   $     41 $    100
  Separate account deposits	        74,364    170,514   55,192

      Total premiums and deposits
        collected	                $ 74,421   $170,555 $ 55,292

Statement of Operations:
Premium income		                $     57   $     41 $    100
Net investment income	                461        498      445
Separate account fees	              8,851      7,728    3,941

      Total revenues	              9,369      8,267    4,486

Benefits and claims	                    (254)        35     (140)
Amortization                           4,158      2,061    1,158
Commission expenses	                     184         12       10
Other operating expenses               3,117      3,031    2,192

      Total benefits and expenses	    7,205      5,139    3,220

      Operating income before
        income taxes	              2,164      3,128    1,266

Net realized investment losses	     (783)        --       --

      Income before income taxes    $  1,381   $  3,128 $  1,266

Supplemental Information:
Separate account contracts (1)	    7,052      4,989    3,380

Separate account liabilities (1)	 $401,097   $520,439 $319,973

(1)	Primarily unit-linked assurance products


General: Our international operations include revenues earned and
expenses incurred from abroad, primarily Europe, and include
fees collected on our deposits from unit-linked assurance
products.  The profitability for this segment primarily depends on
the amount of our separate account assets under management, the
management fee charged on those assets and management of our
operating expenses.

Separate account deposits  consist of deposits from our unit-
linked assurance products.  For GAAP these separate account
deposits are not shown as premium income in the income statement.
A change in separate account deposits in a single period does not
cause our operating income to change, although continued increases
or decreases in separate account deposits may affect the growth
rate of separate account assets on which fees are earned.

* During 2001, net deposits decreased $96.2 million to $74.4
million.  The decrease in deposits is primarily due to the
volatile global equity environment which has caused a shift in
sales to fixed-income based investments.


* During 2000, net deposits increased $115.3 million or 209%, to
$170.6 million for the period.  The increase in deposits
is primarily due to 1) strengthening of our distribution system by
engaging more, highly productive agents, 2)
concentrated marketing efforts in certain European countries,
primarily Sweden and Belgium and 3) favorable demand,
in general, for investment based products.

Net investment income represents income earned on our corporate
assets such as cash, short-term investments and fixed securities.
Standard Management International is required to hold a certain
level of cash and short-term investments in order to comply with
local insurance laws.

* Net investment income was $.5 million in 2001 and 2000,
respectively.  Corporate assets averaged  $12.1 million for 2001
and $11.5 million for 2000, respectively.

* The net investment yields earned on average invested assets were
3.80%, 4.31% and 4.06% for the years ended 2001,
2000 and 1999, respectively.

Fees from separate accounts represent the net fees earned on our
unit-linked assurance products. The fees include asset based
administrative fees, premium based administrative fees and the
amortization of front end loads (deferred revenue) into income.
Asset based fees fluctuate in relation to separate account
assets, and premium based fees fluctuate in relation to premium
collections for certain products.  Deferred revenue amortization
fluctuates subject to the amortization rules of SFAS 97.

* During 2001, fees from separate accounts increased $1.1 million
or 15% to $8.9 million.  The increase is primarily a result
of an increase in the amortization of deferred revenue, and is
largely offset by a corresponding increase in the amortization
of deferred acquisition costs.  Average separate account assets
for the 2001 period decreased  $5.9 million or 1% to
$458.6 million.  Actual separate account assets decreased $119.3
million or 23% to $401.1 million.

* During 2000, fees from separate accounts increased $3.8 million
or 96%, to $7.7 million.  This increase is primarily due
to an increase of 82% in the average value of assets held in
separate accounts for the period.  Actual separate account
assets increased $200.5 million or 63%, to $520.4 million.

* The impact of foreign exchange translation increased fees from
separate accounts $.5 million in 2001 and $.7 million in
2000.

Amortization includes the amortization of deferred acquisition
costs, such as sales commissions and other costs, directly related
to selling new business and foreign exchange translation.

* Amortization increased $2.1 million in 2001 to $4.2 million as a
result of applying actual experience to deferred
acquisition cost amortization and from amortizing deferred
acquisition costs associated with increased sales of recent
periods, and is offset by a corresponding increase in deferred
revenue amortization.

* Amortization increased $.9 million in 2000 to $2.1 million due
to amortizing deferred acquisition costs associated with
increased sales of recent periods.

* The impact of foreign exchange translation increased
amortization $.5 million in 2001 and $.9 million in 2000.

Commission expenses represent commission expenses, net of
deferrable amounts.

* Commission expenses were $.2 million and $12 thousand for the
years ended December 31, 2001 and 2000.  Due to the
nature of our business, most incurred commissions are deferred.

Other operating expenses consist of general operating expenses,
including salaries,  net of deferrable amounts.

* Other operating expenses increased $.1 million or 3% in 2001, to
$3.1 million as a result of new systems, depreciation
and related costs.  The number of separate account contracts
administered increased 41% to 7,052 in 2001.

* Other operating expenses increased $.8 million or 38% in 2000,
to $3.0 million primarily as a result of costs associated
with international business growth.  The number of separate
account contracts administered increased 48% to 4,989 in
2000.

Net realized investment losses generally arise when securities are
sold in response to changes in the investment environment.

* Net realized investment losses, for 2001 were $.8 million due to
the sale of a security reflecting changes in market
conditions.

Foreign currency translation comparisons between  2001, 2000, and
1999  are impacted by the strengthening and weakening of
the U.S. dollar relative to foreign currencies, primarily the
Luxembourg franc and the Euro.  The impact of these translations
has been quantified on fees from separate accounts and
amortization.

Liquidity and Capital Resources

Liquidity of Standard Management (Parent Company)

Standard Management is a financial services holding company whose
liquidity requirements are met through payments
received from our subsidiaries.  These payments include 1) surplus
debenture interest, 2) dividends, 3) management fees, 4)
equipment rental fees, 5) lease income  and 6) allocation of taxes
through a tax sharing agreement, all of which are subject to
restrictions under applicable insurance laws and are used to pay
our operating expenses and meet our debt service obligations.
These internal sources of liquidity have been supplemented in the
past by external sources such as revolving credit agreements
and long-term debt and equity financing in the capital markets.

Potential Cash Available for 2002

We anticipate that available cash from our existing working
capital, surplus debenture interest, dividends, management
fees, rental income and tax sharing payments will be more than
adequate to meet our anticipated parent company cash requirements
for 2002.  The following describes our potential sources of cash
in 2002.

Surplus Debenture Interest.  We loaned $27.0 million to Standard
Life pursuant to unsecured surplus debenture
agreements ("surplus debentures") which requires Standard Life to
make quarterly interest payments at a variable corporate base
rate plus 2% per annum, and annual principal payments of $1.0
million per year beginning in 2007 and concluding in 2033.  The
interest and principal payments are subject to quarterly approval
by the Indiana Department of Insurance, depending upon
satisfaction of certain financial tests relating to levels of
Standard Life's capital and surplus and general approval of the
Commissioner of the Indiana Department of Insurance. We currently
anticipate these quarterly approvals will be granted.
Assuming the approvals are granted and the December 31, 2001
interest rate of 6.75% continues, we are expected to receive
interest income of $1.8 million from the surplus debenture in
2002.

Dividends paid from Standard Life are limited by laws applicable
to insurance companies.  As an Indiana domiciled
insurance company, Standard Life may pay a dividend or
distribution from its surplus profits, without the prior approval
of the Commissioner of the Indiana Department of Insurance, if the
dividend or distribution, together with all other dividends and
distributions paid within the preceding twelve months, does not
exceed the greater of 1) net gain from operations or 2) 10% of
surplus, in each case as shown in its preceding annual statutory
financial statements.  In 2001, we received dividends of $1.6
million and $.5 million from Standard Life and Savers Marketing,
respectively.  In 2002, we could receive dividends of
approximately $4.4 million from Standard Life.

Management Fees.  Pursuant to a management services agreement,
Standard Life paid $3.6 million during 2001 for
certain management services related to the production of business,
investment of assets and evaluation of acquisitions.  In addition,
Dixie Life paid Standard Life $1.1 million in 2001, respectively,
for certain management services provided.  Both of these
agreements provide that they may be modified or terminated by the
applicable Departments of Insurance in the event of financial
hardship of Standard Life or Dixie Life.  In 2002, we are expected
to receive management fees of $3.6 million from Standard Life.

Pursuant to the management services agreement, Premier Life
(Luxembourg) paid $1.2 million during 2001 for certain
management, technical support and administrative services. The
agreement provides that it may be modified or terminated by either
Standard Management or Premier Life (Luxembourg).  In 2002, we are
expected to receive management fees of $1.2 million from
Premier Life (Luxembourg).

Equipment Rental Fees.  In 2001 we charged subsidiaries $1.1
million for the use of our equipment.  In 2002, we are
expected to receive $1.1 million of rental income from Standard
Life.

Lease Income.  Effective January 1, 2002, we entered into a
lease agreement with Standard Life whereby Standard Life
will lease approximately 46,000 square feet of our office space
located at 10689 North Pennsylvania Street.  In 2002, we are
expected to receive lease income of $.8 million from Standard
Life.

Tax Sharing Payments.  Effective January 1, 2000 we entered into a
tax sharing agreement with Savers Marketing
Corporation and Standard Management International that allocates
the consolidated federal income tax liability.  During  2001,
Savers Marketing and  Standard Management International paid $.5
million and $.8 million, respectively, in accordance with this
agreement.

Estimated Cash Required in 2002

The following are the characteristics of our mortgage payable,
notes payable and trust preferred securities, including
estimated required payments in 2002.

Mortgage Payable:

The following are characteristics of our mortgage payable
agreement at December 31, 2001:

* outstanding balance of $6.9 million;

* interest rate of 7.375% per annum;

* principal and interest payments: $56 thousand dollars per month
through December, 2011;

* interest payments required in 2002 based on current balances
will be $.5 million;

* note may be prepaid on or before January, 2005 at 105% and
declining to 101% after December, 2008.

Notes Payable:

The following are characteristics of our amended credit agreement
at December 31, 2001:

* outstanding balance of $9.0 million;

* weighted average interest rate of  7.28%;

* principal payments:  $.6 million due March 2002 and $2.5 million
due annually thereafter through March 2005;

* subject to certain restrictions and financial and other
covenants;

* interest payments required in 2002 based on current balances
will be $.7 million.

The following are characteristics of our subordinated debt
agreement at December 31, 2001:

* outstanding balance of $11.0 million;

* interest rate is greater of 1) 10% per annum or 2) six month
London Inter-Bank Offered Rate ("LIBOR") plus 1.5%;

* due October 2007;

* interest payments required in 2002 based on current balances
will be $1.1 million.

Trust Preferred Securities: These securities represent an
undivided beneficial interest in the assets of SMAN Capital Trust
I, a Delaware business trust organized to purchase our junior
subordinated debentures and issue preferred securities.  The
assets of the Trust consist solely of the debentures which were
purchased by the Trust with the proceeds of the offering.  On
August 9, 2001, the Trust completed a public offering of $20.7
million of its 10.25% preferred securities.  The Trust used the
proceeds of this offering to purchase our 10.25% junior
subordinated debentures.  Net proceeds from the sale of the
debentures of approximately $19.3 million were used to redeem our
Series A preferred stock  of $6.5 million and repay $7.3 million
of our notes payable. The remaining proceeds were used for general
corporate purposes.

The following are characteristics of our trust preferred
securities at December 31, 2001:

* outstanding balance of $20.7 million;

* annual distribution rate of  10.25%: distributions may be
deferred up to 20 consecutive quarters;

* matures August 9, 2031;

* may be redeemed on or after August 9, 2006 at $10 per security
plus accumulated and unpaid distributions;

* distributions required in 2002 based on current balances will be
$2.1 million;

* distributions are classified as interest expense.

General:  On a consolidated basis we reported net cash provided by
operations of $8.0 and $.9 million for 2001 and 2000,
respectively. Although deposits received on our interest-sensitive
annuities and other financial products are not included in cash
flow from operations under GAAP, these funds are available. Cash
provided by operations plus net deposits received, less net
account balances returned to policyholders on interest sensitive
annuities and other financial products, resulted in positive cash
flow of $222.0 and $108.2 million for 2001 and 2000, respectively.
Cash generated on a consolidated basis is available only to the
extent that it is generated at the holding company level or is
available through interest, dividends, management fees or other
payments from our subsidiaries.

At March 1, 2002, we had "parent company only" cash and short-term
investments of  $.9 million. These funds are
available for general corporate purposes.  Our "parent company
only" operating expenses (not including interest expense) were
$4.3 million and $4.5 million for 2001 and 2000, respectively.

Liquidity of Insurance Operations

U.S. Insurance Operations.  The principal liquidity requirements
of Standard Life are its 1) contractual obligations to
policyholders, 2) surplus debenture interest, dividends,
management fees and rental fees to Standard Management and 3)
other operating expenses. The primary source of funding for these
obligations has been cash flow from premium income, net investment
income, investment sales and maturities and sales of annuity
products. These sources of liquidity for Standard Life
significantly exceed scheduled uses. Liquidity is also affected by
unscheduled benefit payments including death benefits, policy
withdrawals and surrenders. The amount of withdrawals and
surrenders is affected by a variety of factors such as renewal
interest crediting rates, interest rates for competing products,
general economic conditions, Standard Life's A.M. Best rating and
events in the industry that affect policyholders' confidence. In
April 2001, Standard Life received a rating from A.M. Best of B++,
or "very good" category.  As rationale for this rating, A.M. Best
noted Standard Life's continued business growth, improved
operating results during 2000 and increased fee income received
from administration.

The policies and annuities issued by Standard Life contain
provisions that allow policyholders to withdraw or surrender
their policies under defined circumstances. These policies and
annuities generally contain provisions, which apply penalties or
otherwise restrict the ability of policyholders to make such
withdrawals or surrenders. Standard Life closely monitors the
surrender and policy loan activity of its insurance products and
manages the composition of its investment portfolios, including
liquidity, to ensure it has sufficient cash resources in light of
such activity.

Changes in interest rates may affect our incidence of policy
surrenders and other withdrawals. In addition to the potential
effect on liquidity, unanticipated withdrawals in a changing
interest rate environment could adversely affect our earnings if
we were required to sell investments at reduced values to meet
liquidity demands. We manage our asset and liability portfolios in
order to minimize the adverse earnings effect of changing market
interest rates. We seek assets that have duration characteristics
similar to the liabilities that they support. We also prepare cash
flow projections and perform cash flow tests under various market
interest rate scenarios to assist in evaluating liquidity needs
and adequacy. Our  U.S. insurance subsidiaries currently expect
available liquidity sources and future cash flows to be adequate
to meet the demand for funds.

Statutory surplus is computed according to rules prescribed by the
National Association of Insurance Commissioners as
modified by the Indiana Department of Insurance, or the state in
which our insurance subsidiaries do business. Statutory accounting
rules are different from GAAP and are intended to reflect a more
conservative perspective. With respect to new business, statutory
accounting practices require that: 1) acquisition costs (primarily
commissions and policy issue costs) and 2) reserves for future
guaranteed principal payments and interest in excess of statutory
rates, be expensed in the year the new business is written. These
items cause a reduction in statutory surplus or surplus strain in
the year written for many insurance products. We design our
products to minimize such first-year losses, but certain products
continue to cause a statutory loss in the year written. For each
product, we control the amount of net new premiums written to
manage the effect of such surplus strain. Our long-term growth
goals contemplate continued growth in our insurance businesses. To
achieve these growth goals, our U.S. insurance subsidiaries
will need to increase statutory surplus. Additional statutory
surplus may be secured through various sources such as internally
generated statutory earnings, infusions with funds generated
through our debt or equity offerings, or mergers with other life
insurance companies. If additional capital is not available from
one or more of these sources, we believe that we could reduce
surplus strain through the use of reinsurance or through reduced
writing of new business.

We believe that the operational cash flow of Standard Life will be
sufficient to meet our anticipated needs for 2002.  As
of December 31, 2001, Standard Life had statutory capital and
surplus for regulatory purposes of $43.9 million.  As the annuity
business produced by Standard Life increases, Standard Life
expects to satisfy statutory capital and surplus requirements
through statutory profits and through additional capital
contributions by Standard Management.  Net cash flow from
operations on a statutory basis of Standard Life, after payment of
benefits and operating expenses, was  $215.0 million for  2001 and
$92.9 million for 2000.  If the need arises for cash, which is not
readily available, additional liquidity could be obtained from the
sale of invested assets.

International Operations.  The amount of dividends that may be
paid by Standard Management International without
regulatory approval is limited to its accumulated earnings.
Standard Management International and Premier Life (Luxembourg)
were not permitted to pay dividends in 2001 and 2000 due to
accumulated losses.  Premier Life (Bermuda) paid a dividend of $.3
million in 2000. We do not anticipate receiving dividends from
Standard Management International in 2002.


Factors That May Affect Future Results

We are subject to a number of factors affecting our business,
including intense competition in the industry and the ability
to attract and retain agents and employees.  If we are unable to
respond appropriately to any of these factors, business and
financial results could suffer.

Our operating results are affected by many factors,
including, competition, lapse rates, interest rates, maintenance
of insurance ratings, governmental regulation and general business
conditions, many of which are outside its control.

We operate in a highly competitive environment and are in
direct competition with a large number of insurance
companies, many of which offer a greater number of products
through a greater number of agents and have greater resources.
In addition, we may be subject, from time to time, to new
competition resulting from additional private insurance carriers
introducing products similar to those offered by us.  Moreover, as
a result of recent federal legislation, commercial banks,
insurance companies, and investment banks may now combine,
provided certain requirements are satisfied, and we expect to
encounter increased competition from these providers of financial
services.  This competitive environment could result in lower
premiums, loss of sales and reduced profitability.

Our management believes that the ability to compete is
dependent upon, among other things, the ability to retain and
attract independent general agents to market products and the
ability to develop competitive products that also are profitable.
Although management believes that good relationships with our
independent general agents exist, competition for those agents
among insurance companies is intense.  Our independent general
agents typically represent other insurance companies and may
sell products that compete with our products.  Sales of our
annuity, life insurance and unit-linked assurance products and
therefore, our business, results of operations and financial
condition may be adversely affected if we are unsuccessful in
attracting and retaining independent agents and marketing
organizations.  See "Business of Standard Management-Competition."

Our success also depends upon the continued contributions of
key officers and employees.  Should one or more of these
individuals leave or otherwise become unavailable for any reason,
business and results of operations could be materially adversely
affected.  See "Business of Standard Management-Employees."

Financial results could suffer if our A.M. Best ratings are
downgraded.

Insurers compete with other insurance companies, financial
intermediaries and other institutions on the basis of a number
of factors, including the ratings assigned by A.M. Best Company,
Inc.  A.M. Best Company assigns ratings labeled A++ through
F ("Superior," "Excellent," "Very Good," "Fair," "Marginal,"
"Weak," "Poor," "Under Regulatory Supervision," and "In
Liquidation").  Standard Life and Dixie Life have a rating of B++
(Very Good) and B (Fair), respectively, by A.M. Best Company.
 A.M. Best Company's ratings represent their opinion based on a
comprehensive quantitative and qualitative review of our
financial strength, operating performance and market profile.  A
rating of B++ is assigned by A.M. Best to companies that, in their
opinion, have achieved very good overall performance when compared
to the standards established by A.M. Best, and have a good
ability to meet their obligations to policyholders over a long
period of time. A rating of B is assigned by A.M. Best to
companies that, in their opinion, have achieved good overall
performance when compared to the standards established by A.M.
Best.  According to A.M. Best, these companies generally have an
adequate ability to meet their obligations to policyholders, but
their financial strength is vulnerable to unfavorable changes in
underwriting or economic conditions.  In evaluating a company's
financial and operating performance, A.M. Best reviews the
company's profitability, leverage and liquidity as well as the
company's book of business, the adequacy and soundness of its
reinsurance, the quality and estimated market value of its assets,
the adequacy of its reserves, and the experience and competence of
its management.  A.M. Best reviews its ratings of insurance
companies from time to time.  If the A.M. Best ratings were
downgraded, sales of annuity products could be significantly
impacted and the financial condition and results of operations
could be materially adversely affected.  See "Business of Standard
Management-Competition."

Changes in governmental regulation and legislation could have a
substantial impact on our profitability.

Our insurance subsidiaries are subject to substantial
governmental regulation in each of the jurisdictions in which
they conduct business.  Changes in these regulations could have a
significant impact on our profitability.  The primary purpose of
these regulations is to protect policyholders, not investors.
These regulations are vested in governmental agencies having broad
administrative power with respect to all aspects of our insurance
business, including premium rates, policy forms and applications,
marketing illustrations, dividend payments, capital adequacy and
the amount and type of investments we may have.

The National Association of Insurance Commissioners, or NAIC,
and state insurance regulators continually reexamine
existing laws and regulations and their application to insurance
companies.  Changes in the NAIC or state regulations, including,
for example, changes in the risk-based capital requirements which
are determined by the NAIC and state regulators, could affect
the ability of our subsidiaries to pay dividends to us which could
affect our ability to make payments to you.

In addition, the federal government has become increasingly
involved with insurance regulation in recent years, including
the passage of the Gramm-Leach-Bliley Act, and more comprehensive
federal legislation in this area is still being actively
considered by Congress.  Federal legislation and administrative
policies in several areas, including pension regulation, age and
sex discrimination, financial services regulation and federal
taxation, affect us specifically and the insurance business in
general.  New state or federal laws or regulations, as well as a
more strict interpretation of existing laws or regulations, may
adversely affect our current claims exposure, adversely affect the
profitability of our current and future products, and materially
affect our future operations by increasing the costs of regulatory
compliance.  We cannot predict the impact of future state or
federal laws or regulations on our business.  See "Business of
Standard Management - Regulatory Factors."

Interest-rate fluctuations could negatively affect spread income.

Significant changes in interest rates expose insurance companies
to the risk of not earning anticipated spreads between the
interest rate earned on investments and the credited interest
rates paid on outstanding policies.  Both rising and declining
interest rates can negatively affect spread income.  Although we
develop and maintain asset/liability management programs and
procedures designed to preserve spread income in rising or falling
interest rate environments, changes in interest rates could
adversely affect these spreads.

Our financial results are highly dependent on the financial
condition of the companies in which we make investments and
could suffer if the value of our investments decreases due to
factors beyond our control.

Our invested assets, approximately $966 million, represented
approximately 60% of our total assets at December 31,
2001.  These investments are subject to customary risks of credit
defaults and changes in market values.  In addition, the value of
our investment portfolio depends in part on the financial
condition of the companies in which we have made investments.
Factors beyond our control, including interest rate levels,
financial market performance, and general economic conditions may
have a significant negative impact on our investment income and
the value of our investment assets, which would have a material
adverse affect on our financial condition.

Our substantial reliance on reinsurers could cause our financial
results to suffer.

We are able to assume insurance risks beyond the level which
our capital and surplus would support by transferring
substantial portions of risks to other, larger insurers through
reinsurance contracts.  Approximately 45% of our life insurance in
force and 5% of our annuity policy liabilities have risks that we
have reinsured through reinsurance contracts.  However, these
reinsurance arrangements leave us exposed to credit risk, which
exists because reinsurance does not fully relieve us of our
liability to our insureds for the portion of the risks ceded to
reinsurers.  This liability may exceed our established reserves
which would have a significant negative affect on our net income.
In addition, reinsurance may not continue to be available to us at
commercially reasonable rates.  If reinsurance is not available to
us in the future, the amounts we reserve as liabilities for
payment of claims would significantly increase and the amount and
value of policies we sell would significantly decrease, which
would have a material adverse effect on our business and operating
results.

Our policy claims fluctuate from year to year, and future benefit
payments may exceed our established reserves, which would
cause our earnings to suffer.

Our earnings are significantly dependent upon the extent to which
the actual claims received by our subsidiaries is consistent with
the actuarial practices and assumptions we use in establishing
reserves for the payment of benefit claims.  To the extent that
the actual claims experience of our subsidiaries exceeds our
established reserves, our operating income would be negatively
affected, resulting in an adverse affect on our earnings.

Volatility in benefit claims is common in the life insurance
industry.  Our benefits and claims were $28 million and $20
million for the years 2001 and 2000 respectively.  While our
reserves have been sufficient to cover policy claims in the past
and we attempt to limit the risk by carefully underwriting new
policies and sharing risks with reinsurance companies, we may
still experience a period of higher than anticipated benefit
claims that exceeds our established reserves.  If this were to
happen, it could result in increased operating losses.

Because a significant portion of our annuity contracts are
surrenderable, any substantial increase in the level of surrenders
could negatively affect financial results.

As of December 31, 2001, approximately 88% or $735 million of
annuity contracts in force (measured by statutory
reserves) were surrenderable.  Approximately 12% of those
contracts or approximately $97 million of annuity contracts in
force (measured by statutory reserves) are surrenderable without
charge.  Changes in prevailing interest rates, ratings or other
factors which result in or lead to significant levels of
surrenders of existing annuity contracts could have a material
adverse effect on our financial condition and results of
operations.  Surrenders result in a reduction of invested assets
that earn investment income and a reduction of policyholder
account balances that credit interest.

Our financial results could be materially adversely affected if
our assumptions regarding the value of intangible assets prove
to be incorrect.

Included in our financial statements are certain assets that
are primarily valued, for financial statement purposes, on the
basis of management's assumptions.  These assets include items
such as:

* deferred acquisition costs;

* present value of future profits;

* costs in excess of net assets acquired; and

* organization and deferred debt issuance costs.

The assumptions are based upon, among others, interest rate
spread and rates of mortality, surrender and lapse.  If, for
instance, future mortality rates were higher than expected,
projected margins would be lower and deferred acquisition cost
amortization would increase.  The value of these assets reflected
in our December 31, 2001 balance sheet totaled $150 million,
or 9.3% of our assets.  Although we have established procedures to
periodically review the assumptions used to value these assets
and determine the need to make adjustments, if our assumptions are
incorrect and adjustments need to be made, our financial
results could be materially adversely affected.

Item 7a.     Quantitative and Qualitative Disclosures About Market
Risk

We seek to invest available funds in a manner that will maximize
shareholder value and fund future obligations to
policyholders and debtors, subject to appropriate risk
considerations.  Many of our products incorporate surrender
charges, market interest rate adjustments or other features to
encourage persistency.  Approximately 74% of the total insurance
liabilities at December 31, 2001 had surrender penalties or other
restrictions and approximately 14% are not subject to surrender.

We also seek to maximize the total return on our investments
through active investment management.  Accordingly, we
have determined that the entire portfolio of fixed maturity
securities is available to be sold in response to:

* changes in market interest rates,

* changes in relative values of individual securities and asset
sectors,

* changes in prepayment risks,

* changes in credit quality outlook for certain securities,

* liquidity needs, and

* other factors.

Profitability of many of our products is significantly affected by
the spreads between interest yields on investments and
rates credited on insurance liabilities.  Although substantially
all credited rates on annuity products may be changed annually
(subject to minimum guaranteed rates), changes in competition and
other factors, including the impact of the level of surrenders
and withdrawals, may limit the ability to adjust or to maintain
crediting rates at levels necessary to avoid narrowing of spreads
under certain market conditions.  As of December 31, 2001, the
average yield, computed on the cost basis of the investment
portfolio, was 7.14%, and the average interest rate credited or
accruing to total insurance liabilities was 5.00%, excluding
guaranteed interest bonuses for the first year of the annuity
contract.

Computer models were used to perform simulations of the cash flows
generated from our existing business under various
interest rate scenarios.  These simulations measured the potential
gain or loss in fair value of interest rate-sensitive financial
instruments.  With such estimates, we seek to closely match the
duration of assets to the duration of liabilities. When the
estimated duration of assets and liabilities are similar, exposure
to interest rate risk is minimized because a change in the value
of assets should be largely offset by a change in the value of
liabilities.  At December 31, 2001, the option adjusted duration
of fixed maturity securities and short-term investments were
approximately 5.1, and the option adjusted duration of insurance
liabilities was approximately 4.0.  The "option adjusted duration"
compares the change in the value of an asset or liability with a
change in interest rates.  For instance, the option duration of
our fixed maturity securities and short-term investments is
approximately 5.1.  This means that if interest rates in general
increased 1%, the value of our asset portfolio would decrease by
approximately 5.1%.

If interest rates were to increase by 10% from their December 31,
2001 levels, our fixed maturity securities and short-term
investments (net of the corresponding changes in the values of
cost of policies purchased, cost of policies produced and
insurance liabilities) would decline in fair value by
approximately $24.5 million.

The calculations involved in our computer simulations
incorporate numerous assumptions, require significant estimates
and assume an immediate change in interest rates without any
management of the investment portfolio in reaction to such change.
Consequently, potential changes in the value of our financial
instruments indicated by the simulations will likely be different
from the actual changes experienced under given interest rate
scenarios, and the differences may be material.  Because our
investments and liabilities are actively managed, actual losses
could be less than those estimated above.

Standard Management International could be exposed to currency
fluctuations if currencies within the conventional
investment portfolio or certain actuarial reserves are mismatched.
The assets and liabilities of this portfolio and the reserves are
continually matched by the company and at regular intervals by an
independent actuary. In addition, Premier Life (Luxembourg's)
stockholder's equity is denominated in Euros. Premier Life
(Luxembourg) does not hedge its translation risk because its
stockholder's equity will remain in Euros for the foreseeable
future and no significant realized foreign exchange gains or
losses are anticipated.  At December 31, 2001, there is a $2.2
million unrealized loss from foreign currency translation.

Item 8.	Consolidated Financial Statements and Supplementary Data

The financial statements and supplementary data required with
respect to this Item 8 are listed in Item 14(a)(1) and
included in a separate section of this report.

Item 9.	Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure

None.


PART III

The Registrant will file a definitive proxy statement pursuant to
Regulation 14A of the Securities Exchange Act of 1934
in connection with our 2002 Annual Meeting of Shareholders, (the
"Proxy Statement") not later than 120 days after the end of
the fiscal year covered by this report, and certain information
included therein is incorporated herein by reference.  Only those
sections of the Proxy Statements that specifically address the
items set forth herein are incorporated by reference.  Such
incorporation does not include the Compensation Committee Report
or the Performance Graph included in the Proxy Statement.

Item 10.	Directors and Executive Officers of the Registrant

The information concerning our directors required by this item is
incorporated by reference to our Proxy Statement.

The information concerning our executive officers required by this
Item is incorporated by reference herein to the section
in Part I, entitled "Executive Officers".

The information regarding compliance with Section 16 of the
Securities and Exchange Act of 1934 is to be set forth in
the Proxy Statement and is hereby incorporated by reference.

Item 11.	Executive Compensation

The information required by this Item is incorporated by reference
to our Proxy Statement.

Item 12.	Security Ownership of Certain Beneficial Owners and
Management

The information required by this Item is incorporated by reference
to our Proxy Statement.

Item 13.	Certain Relationship and Related Transactions

The information required by this Item is incorporated by reference
to our Proxy Statement.



PART IV

Item 14.	Exhibits, Financial Statement Schedules and Reports on
Form 8-K

(a)(1) and (2)  The response to this portion of Item 14 is
submitted as a separate section of this report.

(a)(3)  List of Exhibits:

Exhibit
Number		Description of Document


2.1	Amended and Restated Agreement and Plan of Merger dated as of
     December 9, 1997 among Standard
     Management, SAC and Savers Life (incorporated by reference to
     Registration Statement on Form S-4
     (Registration No. 333-43023)).

2.2	Stock Purchase Agreement dated as of June 4, 1998 by and
     among Standard Management and MC Equities,
     Inc. (incorporated by reference to Form 8-K (Registration No.
     0-20882)).

2.3	First Amendment to Stock Purchase Agreement dated as of
     July 1, 1998 by and among Standard Management
     and MC Equities, Inc. (incorporated by reference to Form 8-K
     (Registration No. 0-20882)).

2.4	Second Amendment to Stock Purchase Agreement dated as of
     July 23, 1998 by and among Standard
     Management and MC Equities, Inc. (incorporated by reference
     to Form 8-K (Registration No. 0-20882)).

2.5	Third Amendment to Stock Purchase Agreement dated as of
     October 8, 1998 by and among Standard
     Management and MC Equities, Inc. (incorporated by reference
     to Form 8-K (Registration No. 0-20882)).

3.1	Amended and Restated Articles of Incorporation, as
     amended (incorporated by reference to Annual Report on
     Form 10-K (File No. 0-20882) for the year ended December 31,
     1996).

3.2	Amended and Restated Bylaws as amended (incorporated by
     reference to Registration Statement on Form S-1
     (Registration No. 33-53370) as filed with the Commission on
     January 27, 1993 and to Exhibit 3 of Quarterly
     Report on Form 10-Q (File No. 0-20882) for the quarter ended
     September 30, 1994).

4.1  Certificate of Trust of SMAN Capital Trust I (incorporated by
     reference to Registration Statement on Form S-1
     (Registration No. 333-60886))

4.2  Trust Agreement of SMAN Capital Trust I  (incorporated by
     reference to Registration Statement on Form S-1
     (Registration No. 333-60886))

4.3  Form of Amended and Restated Trust Agreement of SMAN Capital
     Trust I among Standard Management,
     Bankers Trust Company and Bankers Trust (Delaware)
     (incorporated by reference to Registration Statement
     on Form S-1 (Registration No. 333-60886))

4.4  Form of Preferred Securities Certificates (incorporated by
     reference to Registration Statement on Form S-1
     (Registration No. 333-60886))

4.5  Form of Junior Subordinated Indenture between Standard
     Management and Bankers Trust Company
     (incorporated by reference to Registration Statement on Form
     S-1 (Registration No. 333-60886))

4.6  Form of Junior Subordinated Debenture (incorporated by
     reference to Registration Statement on Form S-1
     (Registration No. 333-60886))



Exhibit
Number		Description of Document


4.7  Form of Preferred Securities Guarantee Agreement between
     Standard Management and Bankers Trust Company
     (incorporated by reference to Registration Statement on Form
     S-1 (Registration No. 333-60886))

4.8	Form of Senior Note Agreement Warrant (incorporated by
     reference to Registration Statement on
     Form S-1 (Registration No. 33-53370)).

4.9	Amended and Restated Registration Rights Agreement dated
     as of April 15, 1997 by and between
     Standard Management and Fleet National Bank (incorporated by
     reference to Annual Report on Form 10-K (File No. 0-20882)).

4.10	Form of Fleet National Bank Warrant (incorporated by
     reference to Annual Report on Form 10-K (File
     No. 0-20882)).

4.11	Form of President's Club Warrant (incorporated by
     reference to Annual Report on Form 10-K (File No. 0-20882)).

10.1	Third Amended and Restated Employment Contract by and
     between Standard Management and Ronald D. Hunter, dated and
     effective, as amended, July 1, 1999 (incorporated by
     reference to Quarterly Report on Form 10-Q (File No. 0-20882)
     for the quarter ended September 30, 1999).

10.2	Third Amended and Restated Employment Contract by and
     between Standard Management and
     Edward T. Stahl, dated and effective, as amended, July 1,
     1999 (incorporated by reference to Quarterly
     Report on Form 10-Q (File No. 0-20882) for the quarter ended
     September 30, 1999).

10.3	Third Amended and Restated Employment Contract by and
     between Standard Management and
     Raymond J. Ohlson, dated and effective, as amended, July 1,
     1999 (incorporated by reference to Quarterly Report on Form
     10-Q (File No. 0-20882) for the quarter ended September 30,
     1999).

10.4	Second Amended and Restated Employment Contract by and
     between Standard Management and
     Stephen M. Coons dated and effective, as amended, July 1,
     1999 (incorporated by reference to Quarterly Report on Form
     10-Q (File No. 0-20882) for the quarter ended September 30,
     1999).

10.5	Indemnification Agreement between Standard Management
     and Stephen M. Coons and Coons & Saint,
     dated August 1, 1991 (incorporated by reference to
     Registration Statement on Form S-1 (Registration
     No. 33-53370) as filed with the Commission on January 27,
     1993).

10.6	Standard Management Amended and Restated 1992 Stock
     Option Plan (incorporated by reference to
     Registration Statement on Form S-4 (Registration No. 333-
     35447) as filed with the Commission on September 11, 1997.

10.7* Lease by and between Standard Life and Standard
     Management, dated December 28, 2001.

10.8	Management Service Agreement between Standard Life and
     Standard Management dated August 1, 1992, as amended on
     January 1, 1997 and as further amended on
     January 1, 1999 (incorporated by reference to Annual Report
     on Form 10-K (File No. 0-20882)).

10.9	Agreement for Assumption Reinsurance between the
     National Organization Of Life and Health
     Insurance Guaranty Associations and Standard Life,
     concerning, The Midwest Life Insurance Company
     in Liquidation effective June 1, 1992 (incorporated by
     reference to Registration Statement on
     Form S-1 (Registration No. 33-53370) as filed with the
     Commission on January 27, 1993).


Exhibit
Number		Description of Document

10.10 Reinsurance Agreement between Standard Life and
     Swiss Re Life and Health effective May 1, 1975
     (incorporated by reference to Registration Statement on Form
     S-1 (Registration No. 33-53370) as filed with the Commission
     on January 27, 1993).

10.11 Reinsurance Agreement between Firstmark Standard
     Life Insurance Company and Swiss Re Life and
     Health effective February 1, 1984 (incorporated by reference
     to Registration Statement on Form S-1
     (Registration No. 33-53370) as filed with the Commission on
     January 27, 1993).

10.12 Reinsurance Contract between First International
     and Standard Life dated July 10, 1992 (incorporated
     by reference to Registration Statement on Form S-1
     (Registration No. 33-53370) as filed with the
     Commission on January 27, 1993).

10.13 Amended Reinsurance Agreement between Standard Life
     and Winterthur Life Re Insurance Company
     effective January 1, 1995 (incorporated by reference to
     Annual Report on Form 10-K (File No. 0-20882) for the year
     ended December 31, 1996).

10.14 Management Service Agreement between Premier Life
     (Luxembourg) and Standard Management dated
     September 30, 1994 (incorporated by reference to Annual
     Report on Form 10-K (File No. 0-20882)
     for the year ended December 31, 1994).

10.15 Assignment of Management Contract dated October 2,
     1995 of Management Contract dated January 1,
     1987 between DNC and Dixie Life to Standard Life
     (incorporated by reference to Annual Report on
     Form 10-K (File No. 0-20882) for the year ended December 31,
     1996).

10.16 Automatic Indemnity Reinsurance Agreement between
     First International and The Guardian
     Insurance & Annuity Company, Inc. dated and effective January
     1, 1996 (incorporated by reference
     to Annual Report on Form 10-K (File No. 0-20882) for the year
     ended December 31, 1996).

10.17 Indemnity Retrocession Agreement between The
     Guardian Insurance & Annuity Company, Inc. and
     Standard Life dated and effective January 1, 1996
     (incorporated by reference to Annual Report on
     Form 10-K (File No. 0-20882) for the year ended December 31,
     1996).

10.18 Automatic Indemnity Reinsurance Agreement between
     The Guardian Insurance & Annuity Company,
     Inc. and Standard Life dated and effective January 1, 1996
     (incorporated by reference to Annual
     Report on Form 10-K (File No. 0-20882) for the year ended
     December 31, 1996).

10.19 Administrative Services Agreement between First
     International and Standard Life dated and effective
     March 18, 1996 (incorporated by reference to Annual Report on
     Form 10-K (File No. 0-20882) for the year ended December 31,
     1996).

10.20 Amendment No. 1 to Amended and Restated Revolving
     Line of Credit Agreement dated as of March
     10, 1998 between Standard Management and Fleet National Bank
     (incorporated by reference to
     Quarterly Report on Form 10-Q (File No. 0-20882)).

10.21 Amended and Restated Note Agreement dated as of
     March 10, 1998 between Standard Management
     and Fleet National Bank in the amount of $20,000,000
     (incorporated by reference to Quarterly Report
     on Form 10-Q (File No. 0-20882)).

10.22 Amended and Restated Pledge Agreement dated as of
     March 10, 1998 between Standard Management
     and Fleet National Bank (incorporated by reference to
     Quarterly Report on Form 10-Q (File No. 0-20882)).


Exhibit
Number		Description of Document

10.23 Surplus Debenture dated as of November 8, 1996 by
     and between Standard Management and Standard
     Life in the amount of $13,000,000 (incorporated by reference
     to Quarterly Report on Form 10-Q (File
     No. 0-20882) for the quarter ended September 30, 1996).

10.24 Portfolio Indemnify Reinsurance Agreement between
     Dixie Life and Cologne Life Reinsurance
     Company dated and effective December 31, 1997 (incorporated
     by reference to Annual Report on Form 10-K (File No. 0-20882)
     for the year ended December 31, 1996).

10.25 Coinsurance Agreement effective as of July 1, 1997
     by and between Savers Life and World Insurance
     Company (incorporated by reference to Registration Statement
     on Form S-4 (Registration No. 333-35447)).

10.26 Amendment I to the Guardian Indemnity Retrocession
     Agreement effective as of January 1, 1996 by
     and between The Guardian Insurance and Annuity Company and
     Standard Life (incorporated by reference to Registration
     Statement on Form S-4 (Registration No. 333-35447)).

10.27 Promissory Note from Ronald D. Hunter to Standard
     Management in the amount of $775,500 executed
     October 28, 1997 (incorporated by reference to Quarterly
     Report on Form 10-Q (File No. 0-20882) for the quarter ended
     September 30, 1997).

10.28 Reinsurance Agreement between Standard Life and
     Life Reassurance Corporation of America effective
     September 1, 1997 (incorporated by reference to Annual Report
     on Form 10-K (File No. 0-20882) for the year ended December
     31, 1997).

10.29 Reinsurance Agreement between Standard Life and
     Business Men's Assurance Company of America
     effective September 1, 1997 (incorporated by reference to
     Annual Report on Form 10-K (File No. 0-20882) for the year
     ended December 31, 1997).

10.30 Indemnity Reinsurance Agreement between Standard
     Life and the Mercantile and General Life
     Reassurance Company of America dated March 30, 1998 and
     effective June 1, 1997 (incorporated by
     reference to Quarterly Report on Form 10-Q (File No. 0-20882)
     for the quarter ended June 30, 1998).

10.31 Certificate of Designations for Series A
     Convertible Redeemable Preferred Stock (incorporated by
     reference to Quarterly Report on Form 10-Q (File No. 0-20882)
     for the quarter ended June 30, 1998).

10.32 Quota Share Reinsurance Agreement between Savers
     Life and the Oxford Life Insurance Company
     dated September 24, 1998 and effective July 1, 1998
     (incorporated by reference to Quarterly Report
     on Form 10-Q (File No. 0-20882) for the quarter ended
     September 30, 1998).

10.33 Addendum No. 5 to Reinsurance Agreement between
     Standard Life and Winterthur Life Re Insurance
     Company dated August 20, 1998 and effective October 1, 1998
     (incorporated by reference to Quarterly Report on Form 10-Q
     (File No. 0-20882) for the quarter ended September 30, 1998).

10.34 Articles of Merger of Savers Life into Standard
     Life effective as of December 31, 1998 and approved
     by the Indiana Department of Insurance December 29, 1998
     (incorporated by reference to Annual
     Report on Form 10-K (File No. 0-20882) for the year ended
     December 31, 1998).

10.35 Plan and Agreement of Merger of Savers Life into
     Standard Life effective as of December 31, 1998
     dated October 30, 1998 (incorporated by reference to Annual
     Report on Form 10-K (File No. 0-20882) for the year ended
     December 31, 1998).



Exhibit
Number		Description of Document


10.36 Articles of Merger of Midwestern Life into Standard
     Life effective as of December 31, 1998 and
     approved by the Indiana Department of Insurance December 29,
     1998 (incorporated by reference to Annual Report on Form 10-K
     (File No. 0-20882) for the year ended December 31, 1998).

10.37 Plan and Agreement of Merger of Midwestern Life
     into Standard Life effective as of December 31,
     1998 dated October 30, 1998 (incorporated by reference to
     Annual Report on Form 10-K (File No. 0-20882) for the year
     ended December 31, 1998).

10.38 Amended and Restated note Agreement dated as of
     September 24, 1998 between Standard
     Management and Fleet National Bank in the amount of
     $26,000,000 (incorporated by reference to
     Annual Report on Form 10-K (File No. 0-20882) for the year
     ended December 31, 1998).

10.39 Amendment No. 2 to Amended and Restated Revolving
     Line of Credit Agreement dated as of
     September 24, 1998 between Standard Management and Fleet
     National Bank (incorporated by reference to Annual Report on
     Form 10-K (File No. 0-20882) for the year ended December 31,
     1998).

10.40 Amended and Restated Registration Rights Agreement
     dated as of August 19, 1998 between Standard
     Management and Fleet National Bank (incorporated by reference
     to Annual Report on Form 10-K (File No. 0-20882) for the year
     ended December 31, 1998).

10.41 Amended and Restated Pledge Agreement dated as of
     September 23, 1998, between Standard
     Management and Fleet National Bank (incorporated by reference
     to Annual Report on Form 10-K (File No. 0-20882) for the year
     ended December 31, 1998).

10.42 Warrant to purchase common stock of Standard
     Management dated August 19, 1998 entitling Fleet
     National Bank to purchase 20,000 shares (incorporated by
     reference to Annual Report on Form 10-K (File No. 0-20882)
     for the year ended December 31, 1998).

10.43 Guaranty dated October 1, 1998 made by Standard
     Management in favor of Fleet National Bank
     (incorporated by reference to Annual Report on Form 10-K
     (File No. 0-20882) for the year ended December 31, 1998).

10.44 Surplus debenture dated as of December 31, 1998 by
     and between Standard Management and Standard
     Life in the amount of $8.0 million (incorporated by reference
     to Annual Report on Form 10-K (File No. 0-20882) for the year
     ended December 31, 1998).

10.45 Surplus debenture dated as of December 31, 1998 by
     and between Standard Management and Standard
     Life in the amount of $6.0 million (incorporated by reference
     to Annual Report on Form 10-K (File No. 0-20882) for the year
     ended December 31, 1998).

10.46 Employment Agreement between Standard Management
     and P.B. (Pete) Pheffer dated and effective
     July 1, 1999,  (incorporated by reference to Quarterly Report
     on Form 10-Q (File No. 0-20882) for the quarter ended
     September 30, 1999).

10.47 Note Agreement dated October 31, 2000 by and
     between Standard Management and Zurich Capital Markets, Inc.
     in the amount of $11.0 million.  Included as an exhibit to
     this note agreement is an Investment Advisory Agreement dated
     December 1, 2000 by and between Standard Management and
     Scudder Kemper Investments, Inc. (incorporated by reference
     to Annual Report in Form 10-K [File No. 0-20882] for the year
     ended December 31, 2000).



Exhibit
Number		Description of Document


10.48 Letter Agreement serving as Amendment No. 3 to
     Amended and Restated Line of Credit Agreement
     dated October 3, 2000 by and between Standard Management and
     Fleet National Bank  (incorporated by reference to Standard
     Management's Quarterly Report on Form 10-Q (File No. 0-20882)
     for the quarter ended March 31, 2001).

10.49* Employment Agreement between Standard Management
     and John J. Dillon dated and effective January
     1, 2002.

10.50* Promissory note for $6.9 million between Standard
     Management and Republic Bank dated December
     28, 2001.

10.51* Deferred Compensation Plan of Standard Management dated
     and effective December 31, 2001.




21*	List of Subsidiaries of Standard Management

23.1	Consent of Ernst & Young LLP

23.2	Consent of KPMG Audit

24*	Powers of Attorney

*Filed with the initial filing of this Form 10-K on March 29,
2002.

The following is a list of each management contract or
compensatory plan or arrangement required to be filed as an
exhibit to this report.

Exhibit
Number

None

(b)  Reports on Form 8-K filed during the fourth quarter of  2001.

No reports on Form 8-K were filed with the Commission in the
fourth quarter of 2001.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly
caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.

Date: March 29, 2002
STANDARD MANAGEMENT CORPORATION

/s/  Ronald D. Hunter
Ronald D. Hunter
Chairman, President and
Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below on March 29,
2002 by the following persons on behalf of the Registrant and in
the capacities indicated.

/s/  Ronald D. Hunter
Ronald D. Hunter		Chairman, President and Chief
                         Executive Officer
                         (Principal Executive Officer)

  *
P.B. (Pete) Pheffer		Director, Executive Vice President,
                         and Chief Financial Officer
                         (Principal Financial Officer)

  *
Gerald R. Hochgesang	Senior Vice President - Finance
                         and Treasurer
                         (Principal Accounting Officer)

   *
Raymond J. Ohlson		Director

   *
Edward T. Stahl		Director

   *
Stephen M. Coons		Director

   *
Martial R. Knieser		Director

   *
Robert A. Borns		Director

   *
John J. Dillon			Director

   *
Jerry E. Francis		Director

   *
Robert J. Salyers		Director


*By: /s/  Ronald D. Hunter
Ronald D. Hunter
Attorney-in-Fact



                      ANNUAL REPORT ON FORM 10-K

              ITEM 8, ITEM 14(a)(1) AND (2),(c) AND (d)

             FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

                     LIST OF FINANCIAL STATEMENTS

                                 and

                    FINANCIAL STATEMENT SCHEDULES

                           CERTAIN EXHIBITS

                    FINANCIAL STATEMENT SCHEDULES

                     Year Ended December 31, 2001

                   STANDARD MANAGEMENT CORPORATION

                         INDIANAPOLIS, INDIANA










         STANDARD MANAGEMENT CORPORATION AND SUBSIDIARIES

        INDEX TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS
               AND FINANCIAL STATEMENT SCHEDULES

                                                              Page

Audited Consolidated Financial Statements

Report of Independent Auditors		                       F-2

Consolidated Balance Sheets as of December 31, 2001 and 2000   F-4

Consolidated Statements of Income for the Years Ended
December 31, 2001, 2000 and 1999		                       F-5

Consolidated Statements of Shareholders' Equity for the Years
Ended December 31, 2001, 2000 and 1999		                  F-6

Consolidated Statements of Cash Flows for the Years Ended
December 31, 2001, 2000 and 1999		                       F-8

Notes to Consolidated Financial Statements		             F-9

Financial Statement Schedules

The following consolidated financial statement schedules are
included in this report and should be read in
conjunction with the Audited Consolidated Financial Statements.

Schedule II -- Condensed Financial Information of Registrant
(Parent Company) for the Years Ended December 31, 2001, 2000
and 1999	                                                    F-30

Schedule IV -- Reinsurance for the Years Ended December 31,
2001, 2000 and 1999		                                     F-34

Schedules not listed above have been omitted because they
are not applicable or are not required, or because the
required information is included in the Audited Consolidated
Financial Statements or related Notes.



                       Report of Independent Auditors

Shareholders and Board of Directors
Standard Management Corporation

We have audited the accompanying consolidated balance sheets of
Standard Management Corporation and subsidiaries
as of December 31, 2001 and 2000, and the related consolidated
statements of income, shareholders' equity and cash flows for each
of the three years in the period ended December 31, 2001. Our
audits also included the financial statement schedules listed in
the Index at Item 14(a). These financial statements and schedules
are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial
statements and schedules based on our audits. We did not audit the
consolidated balance sheets at September 30, 2001 and 2000 or the
consolidated statements of operations, shareholder's equity
and cash flows for each of the three years in the period ended
September 30, 2001 of Standard Management International S.A.
and subsidiaries, a wholly owned subsidiary group, which financial
statements reflect assets totaling approximately 27% and 37%
of the Company's consolidated assets at December 31, 2001 and 2000
and revenues totaling approximately 11%, 11% and 6% of
consolidated revenues for each of the three years in the period
ended December 31, 2001. Those financial statements, which as
explained in Note 1, are included in the Company's consolidated
balance sheets at December 31, 2001 and 2000, and the Company's
consolidated statements of income, shareholders' equity and cash
flows for each of the three years in the period ended December
31, 2001, were audited by other auditors whose report has been
furnished to us, and our opinion, insofar as it relates to the
data included for Standard Management International S.A., is based
solely on the report of other auditors.

We conducted our audits in accordance with auditing standards
generally accepted in the United States. Those standards
require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. We believe that our audits and the report of other
auditors provide a reasonable basis for our opinion.

In our opinion, based on our audits and the report of other
auditors, the financial statements referred to above present
fairly, in all material respects, the consolidated financial
position of Standard Management Corporation and subsidiaries at
December 31, 2001 and 2000, and the consolidated results of their
operations and their cash flows for each of the three years in
the period ended December 31, 2001, in conformity with accounting
principles generally accepted in the United States. Also, in
our opinion, the related financial statement schedules, when
considered in relation to the basic financial statements taken as
a whole, present fairly in all material respects the information
set forth therein.


Ernst & Young LLP




Indianapolis, Indiana
February 1, 2002





                  Report of Independent Auditors

Shareholders and Board of Directors
Standard Management International S.A.

We have audited the consolidated balance sheets of
Standard Management International S.A. and its subsidiaries as at
September 30, 2001 and 2000 and the related consolidated
statements of operations, shareholders' equity and comprehensive
income, and cash flows for each of the years in the three year
period ended September 30, 2001 (none of which aforementioned
financial statements are separately presented herein). These
consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion
on these consolidated financial statements based on our audits.

We conducted our audits in accordance with auditing standards
generally accepted in the United States of America. Those
standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the
annual accounts.  An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable
basis for our opinion.

In our opinion the financial statements referred to above present
fairly, in all material aspects, the consolidated financial
position of Standard Management International S.A. and its
subsidiaries as at September 30, 2001 and 2000, and the
consolidated results of their operations and their cash flows for
each of the years in the three year period ended September 30,
2001 in conformity with accounting principles generally accepted
in the United States of America.



Luxembourg City, Luxembourg



February 14, 2002
KPMG Audit




       STANDARD MANAGEMENT CORPORATION AND SUBSIDIARIES

                CONSOLIDATED BALANCE SHEETS
       (Dollars in Thousands, Except Per Share Amounts)

								          December 31
								      2001	    2000
                 ASSETS

Investments:
  Securities available for sale:
    Fixed maturity securities, at fair
	value (amortized cost: $932,848
     in 2001 and $742,597 in 2000)	       $  922,961   $  718,912
    Equity securities, at fair value
     (cost: $7 in 2001 and $538 in 2000)	      7          362
  Mortgage loans 	                           5,023        4,778
  Policy loans	                               13,034       14,280
  Real estate 	                                4,011        3,242
  Other invested assets	                        776          776
  Short-term investments	                     15,417       12,489
      Total investments	                    961,229      754,839
Cash	                                         18,144        1,840
Accrued investment income	                14,219       12,298
Amounts due and recoverable from reinsurers	 42,069       43,158
Deferred acquisition costs	               120,382       91,855
Present value of future profits	           22,269       26,343
Goodwill	                                     5,146        5,430
Other assets	                               23,098       14,255
Assets held in separate accounts	          401,097      520,439
      Total assets	                      $1,607,653   $1,470,457

	LIABILITIES AND SHAREHOLDERS' EQUITY

Liabilities:
  Insurance policy liabilities	       $1,074,223   $  837,345
  Accounts payable and accrued expenses	       7,900        7,347
  Obligations under capital lease	            1,152           --
  Mortgage payable	                           6,900           --
  Notes payable	                          19,100       31,500
  Deferred income taxes	                      6,392        4,397
  Liabilities related to separate accounts	401,097      520,439
      Total liabilities	                  1,516,764    1,401,028

Company-obligated trust preferred
  securities	                               20,700           --

Series A convertible redeemable preferred
 stock, par value $100 per share:
      Authorized 130,000; 65,300 shares
      redeemed in 2001, 65,300 issued and
      outstanding in 2000                         --        6,530

Shareholders' Equity:
  Preferred stock, no par value
     Authorized 870,000 shares; none issued
     and outstanding	                         --           --
  Common stock and additional paid in
   capital, no par value
     Authorized 20,000,000 shares; issued
     9,039,471 in 2001 and 9,038,134 in 2000	 63,011       63,019
  Treasury stock, at cost, 1,492,978 shares
   in 2001 and 2000	                          (7,589)      (7,589)
  Accumulated other comprehensive loss	      (6,172)     (12,008)
  Retained earnings 	                     20,939       19,477
      Total shareholders' equity	           70,189       62,899
      Total liabilities and shareholders'
        equity	                           $1,607,653   $1,470,457

	See accompanying notes to consolidated financial statements.

          STANDARD MANAGEMENT CORPORATION AND SUBSIDIARIES

                CONSOLIDATED STATEMENTS OF INCOME
          (Dollars in Thousands, Except Per Share Amounts)


								Year Ended December 31

		       					2001		2000		1999
Revenues:
  Premium income		             $ 9,476   $ 9,474   $10,381
  Net investment income	              59,000    50,776    43,612
  Call option gains (losses)	         (5,906)   (7,603)    1,209
  Net realized investment gains
   (losses)	                       (11,134)   (4,492)       78
  Policy income	                    7,721     8,204     6,826
  Separate account fees	               8,851     7,728     3,941
  Fee and other income	               7,348     5,980     4,207
      Total revenues	              75,356    70,067    70,254

Benefits and expenses:
  Benefits and claims	               6,834    13,830    11,667
  Interest credited to interest-
    sensitive annuities and
    other financial products           30,227    21,335    25,728
  Amortization		                    9,284     9,436     7,471
  Commission expenses		          9,446     1,930       995
  Other operating expenses             14,283    13,715    13,610
  Interest expense and financing costs	3,492     3,417     3,385
      Total benefits and expenses	    73,566    63,663    62,856

Income before federal income taxes,
  extraordinary loss and preferred
  stock dividends		               1,790     6,404     7,398
Federal income tax expense	             10       778     2,126

Income before extraordinary loss
  and preferred stock dividends	     1,780     5,626     5,272
Extraordinary loss, net tax benefits
  of $185	                                 --      (359)       --

Net income	                         1,780     5,267     5,272
Preferred stock dividends	           (318)     (506)     (506)
Earnings available to common
  shareholders	                       $ 1,462   $ 4,761   $ 4,766

Earnings per share - basic:
  Income before extraordinary loss
    and preferred stock dividends	   $   .23   $   .73   $   .69
  Extraordinary loss	                  --      (.05)       --
  Net income 		                      .23       .68       .69
  Preferred stock dividends	           (.04)     (.06)     (.07)
  Earnings available to common
    shareholders	                  $   .19   $   .62   $   .62

Earnings per common share - diluted:
  Income before extraordinary loss
    and preferred stock dividends	   $   .23   $   .70   $   .65
  Extraordinary loss	                  --      (.04)       --
  Net income 	                           .23       .66       .65
  Preferred stock dividends	           (.04)     (.05)     (.05)
  Earnings available to common
    shareholders	                  $   .19   $   .61   $   .60

See accompanying notes to consolidated financial statements.

              STANDARD MANAGEMENT CORPORATION AND SUBSIDIARIES

              CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                          (Dollars in Thousands)

                                            Accumulated
                                               other
					 Common Treasury  comprehensive Retained
			 	Total  stock  stock    income (loss) earnings

Balance at
 January 1, 1999     $66,042  $60,586  $(6,220)  $  1,687  $9,989

Comprehensive loss:
  Net income	        5,272    					     5,272
  Other comprehensive
  loss:
  Change in unrealized
   loss on securities,
   net benefits of
   $8,961          	 (17,527)                     (17,527)
  Change in foreign
    currency
    translation	    (866)			             (866)
    Other comprehensive
     loss	           (18,393)

    Comprehensive
      loss	      (13,121)

Issuance of common
  stock warrants	   1,566    1,566
Treasury stock
  acquired              (582)             (582)
Exercise of stock
  options                (39)                                 (39)
Preferred stock
  dividends	         (506)					           (506)
Balance at December
 31, 1999			 $53,360  $62,152  $(6,802) $(16,706) $14,716

Comprehensive income:
  Net income	        5,267                                5,267
  Other comprehensive
   income:
    Change in
     unrealized gain
     on securities,
     net taxes of
     $3,219	        6,204 			           6,204
    Change in foreign
      currency
      translation     (1,506)				     (1,506)
      Other
       comprehensive
       income          4,698

       Comprehensive
        income         9,965

Issuance of common
  stock warrants         867      867
Treasury stock
 acquired	              (787)             (787)
Preferred stock
 dividends	         (506)                                (506)
Balance at December
 31, 2000			 $62,899  $63,019  $(7,589) $(12,008) $19,477



            STANDARD MANAGEMENT CORPORATION AND SUBSIDIARIES

      CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY - continued
                        (Dollars in Thousands)

                                             Accumulated
                                                other
					 Common Treasury  comprehensive Retained
 			  	Total  stock  stock    income (loss) earnings

Balance at
 December 31, 2000    62,899   63,019   (7,589)   (12,008) 19,477

Comprehensive income:
  Net income	        1,780                                1,780
  Other comprehensive
   income:
    Change in
     unrealized gain
     on securities,
     net taxes of
     $2,897	        5,714 			           5,714
    Change in foreign
      currency
      translation        122 				        122
      Other
       comprehensive
       income          5,836

       Comprehensive
        income         7,616

Adjustment of issuance
  of common stock
  warrants and options    (8)      (8)
Preferred stock
 dividends	         (318)                                (318)
Balance at December
 31, 2001			 $70,189  $63,011  $(7,589) $ (6,172) $20,939


See accompanying notes to consolidated financial statements.














           STANDARD MANAGEMENT CORPORATION AND SUBSIDIARIES

                CONSOLIDATED STATEMENTS OF CASH FLOWS
                      (Dollars in Thousands)




                                       Year Ended December 31

                                      2001		2000		1999
Operating Activities
Net income 				    $   1,780    $   5,267  $ 5,272
Adjustments to reconcile net
  income to net cash provided by
  operating activities:
  Amortization of deferred
    acquisition costs	             9,037        6,419    4,580
  Deferral of acquisition costs	 (38,854)     (35,138) (27,818)
  Deferred federal income taxes	    (270)         829    2,005
  Depreciation and amortization	   1,004        3,671    3,889
  Insurance policy liabilities	  23,972       16,337   14,530
  Net realized investment (gains)
    losses	                      11,134        4,492      (78)
  Accrued investment income	         (500)      (1,194)  (1,541)
  Other	                              687          252    2,014
      Net cash provided by
        operating activities	        7,990          935    2,853

Investing Activities
Fixed maturity securities available
  for sale:
  Purchases	                    (546,548)    (290,117)(236,969)
  Sales	                          328,497      180,402  116,511
  Maturities, calls and
    redemptions	                 17,236        7,466   19,006
Short-term investments, net	       (2,574)       2,487   (3,350)
Other investments, net	            (9,253)      (6,872)   2,270
      Net cash used by investing
        activities	               (212,642)    (106,634)(102,532)

Financing Activities
Borrowings	                      26,218       11,000      300
Repayments of notes payable and
  preferred stock	                (18,930)     (14,000)    (800)
Premiums received on interest-
  sensitive annuities and other
  financial products credited
  to policyholder account balances,
  net of premiums ceded	           322,473      196,489  165,750
Return of policyholder account
  balances on interest-sensitive
  annuities and other financial
  products	                    (108,479)     (89,183) (75,981)
Issuance of common stock and
  warrants	                          (8)         867    1,566
Purchase of common stock for
  treasury	                          --         (787)    (582)
Dividends on preferred stock	         (318)        (506)    (506)
      Net cash provided by
        financing activities	      220,956      103,880   89,747
Net increase (decrease) in cash	  16,304       (1,819)  (9,932)
Cash at beginning of year	        1,840        3,659   13,591
Cash at end of year	              $  18,144  $     1,840 $  3,659

See accompanying notes to consolidated financial statements.

          STANDARD MANAGEMENT CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        December 31, 2001


1.	Summary of Significant Accounting Policies

Organization

Standard Management Corporation ("we", "our", "us", "Standard
Management" or the "Company") is an international
financial services holding company, which directly and through its
subsidiaries 1) issues annuity products, 2) issues unit-linked
assurance products and 3) manages its in force life insurance and
annuity business.

Standard Management's subsidiaries at December 31, 2001 include:
(1) Standard Life Insurance Company of Indiana
("Standard Life") and its subsidiary, Dixie National Life
Insurance Company ("Dixie Life"), (2) Standard Management
International, S.A. ( "Standard Management International") and its
subsidiaries, Premier Life (Luxembourg) S.A. ("Premier Life
(Luxembourg)") and Premier Life (Bermuda) Ltd. ("Premier Life
(Bermuda)") and (3) Savers Marketing Corporation ("Savers
Marketing").

Basis of Presentation

Our accompanying consolidated financial statements of Standard
Management have been prepared in conformity with
generally accepted accounting principles ("GAAP") in the United
States and include our accounts since acquisition or organization.
All significant intercompany balances and transactions have been
eliminated.

The fiscal year end for Standard Management International is
September 30. To facilitate reporting on the consolidated
level, the fiscal year end for Standard Management International
was not changed and the consolidated balance sheets and
statements of operations for Standard Management International at
September 30, 2001 and 2000 and for each of the three years
in the period ended September 30, 2001, are included in our
consolidated balance sheets at December 31, 2001 and 2000 and for
each of the three years in the period ended December 31, 2001.

Use of Estimates

The nature of our insurance businesses requires management to make
estimates and assumptions that affect the amounts
reported in the consolidated financial statements and accompanying
notes. Such estimates and assumptions could change in the
future as more information becomes known, which could impact the
amounts disclosed in this report.

Investments

We classify our fixed maturity and equity securities as available
for sale and, accordingly, these securities are carried at
fair value. Fixed maturity securities include bonds and redeemable
preferred stocks. Changes in fair values of securities available
for sale, after adjustment for deferred acquisition costs, present
value of future profits and deferred income taxes, are reported as
unrealized gains or losses directly in shareholders' equity and,
accordingly, have no effect on net income. The deferred
acquisition costs and present value of future profits adjustments
to the unrealized gains or losses represent valuation adjustments
or reinstatements of these assets that would have been required as
a charge or credit to operations had such unrealized amounts been
realized.

The cost of our fixed maturity securities is adjusted for
amortization of premiums and discounts. The amortization is
provided on a constant effective yield method over the life of the
securities and is included in net investment income.

Mortgage-backed and other collateralized securities, classified as
fixed maturity securities in the consolidated balance
sheets, are comprised principally of obligations backed by an
agency of the United States  ("U.S.") government (although
generally not by the full faith and credit of the U.S.
government). We have reduced the risk normally associated with
these investments by primarily investing in highly rated
securities and in those that provide more predictable prepayment
patterns. The income from these securities is recognized using a
constant effective yield based on anticipated prepayments and the
estimated economic life of the securities. When actual prepayments
differ significantly from anticipated prepayments, the income
recognized is adjusted currently to match that which would have
been recorded had the effective yield been applied since the
acquisition of the security. This adjustment is included in net
investment income.

Mortgage loans on real estate and policy loans are carried at
unpaid principal balances and are generally collateralized.
Real estate investments are carried at cost, less accumulated
depreciation. Short-term investments are carried at amortized
cost, which approximates fair value.

Net Realized Investment Gains or Losses

Net realized investment gains and losses are calculated using the
specific identification method and included in the
consolidated statements of income.  If the values of investments
decline below their amortized cost and this decline is considered
to be other than temporary, the amortized cost of these
investments is reduced to net realizable value and the reduction
is recorded as a realized loss.

Future Policy Benefits

Liabilities for future policy benefits for deferred annuities and
universal life policies are equal to full account value that
accrues to the policyholder (cumulative premiums less certain
charges, plus interest credited).   The average accrual rate was
5.00% in 2001 and 4.90% in 2000.

Insurance policy liabilities for equity indexed annuity products
are computed in accordance with Statement of Financial
Accounting Standards No. 133 ("SFAS 133") and consist of a book
value liability for benefits guaranteed in the contract, combined
with a market value liability for equity-linked benefits of the
contract.

Future policy benefits for traditional life insurance contracts
are computed using the net level premium method on the
basis of assumed investment yields, mortality and withdrawals,
which were appropriate at the time the policies were issued.
Assumed investment yields are based on interest rates ranging from
6.2% to 7.5%. Mortality is based upon various actuarial tables,
principally the 1965-1970 or the 1975-1980 Select and Ultimate
Table. Withdrawals are based upon our experience and vary by
issue age, type of coverage, and duration.

Recognition of Insurance Policy Revenue and Related Benefits and
Expenses

Revenue for single premium immediate annuities consists of
investment income earned during the period.  Expenses
relating to single premium immediate annuities include interest
credited and annuity benefit payments.

Revenue for interest-sensitive annuity contracts consists of
policy charges for surrenders and investment income earned.
Premiums received for these annuity contracts are reflected as
premium deposits and are not recorded as revenues. Expenses
related to these annuities include interest credited to
policyholder account balances. Revenue for universal life
insurance policies consists of policy charges for the cost of
insurance, policy administration charges, surrender charges and
investment income earned during the period. Expenses related to
universal life policies include interest credited to policyholder
account balances and death benefits incurred in excess of
policyholder account balances.

Traditional life insurance premiums are recognized as premium
revenue over the premium paying period of the policies.
Benefits are charged to expense in the period when claims are
incurred and are associated with related premiums through changes
in reserves for future policy benefits which results in the
recognition of profit over the premium paying period of the
policies.

Reinsurance

Premiums, annuity policy charges, benefits and claims,
interest credited and amortization expense are reported net of
reinsurance ceded and are accounted for on a basis consistent with
those used in accounting for the original policies issued and
the terms of the reinsurance contracts.

Separate Accounts

Separate Accounts are maintained for the unit-linked life
insurance and investment contracts of our international
subsidiaries. Separate accounts generally represent funds
maintained in accounts to meet specific investment objectives of
policyholders who bear the investment risk.  We record the related
liabilities at amounts equal to the underlying assets.  Investment
income and investment gains and losses accrue directly to such
policyholders. The assets of each account are segregated and are
not subject to claims that arise out of any of our other business.
Deposits, net investment income and realized gains and losses on
separate accounts assets are not reflected in the consolidated
statements of income.

Foreign Currency Translation

Our foreign subsidiaries' balance sheets and statements of
operations are translated at the year end exchange rates and
average exchange rates for the year, respectively. The resulting
unrealized gain or loss adjustment from the translation to U.S.
dollars is recorded in the foreign currency translation adjustment
as a separate component of accumulated other comprehensive
income.  Foreign exchange gains or losses relating to
policyholders' funds in separate accounts are allocated to the
relevant separate account.

Income Taxes

Income tax assets and liabilities are recognized for the estimated
future tax consequences attributable to differences
between the financial statement carrying amounts of existing
assets and liabilities and their respective tax bases. Deferred
tax assets and liabilities are measured using enacted tax rates in
effect for the year in which those temporary differences are
expected to be recovered or settled. The effect on deferred tax
assets and liabilities of a change in tax rates is recognized in
income in the period in which the change is enacted.

Standard Life and Dixie Life filed a consolidated return for 2000
and 1999 and plan to file a consolidated return in 2001.  Standard
Management and other U.S. non-insurance subsidiaries are taxed as
regular corporations and file a consolidated return. Standard
Management and its U.S. non-insurance subsidiaries were eligible
to consolidate with Standard Life for income tax purposes
beginning in 1996, but do not currently plan to do so.

Standard Management International is incorporated as a holding
company in the Grand Duchy of Luxembourg and,
accordingly, is not currently subject to taxation on income or
capital gains. Standard Management International is subject to an
annual capital tax, which is calculated on the nominal value of
the statutory shareholder's equity at an annual rate of .20%.
Premier Life (Luxembourg) is a normal commercial taxable company
and is subject to income tax at regular corporate rates (statutory
corporate rate of 36% in 2001 and 2000), and
annual capital taxes amounting to approximately 0.5% of its
net equity. Premier Life (Bermuda) is exempt from taxation on
income until March 2016 pursuant to a decree from the Minister
of Finance in Bermuda. To the extent that such income is taxable
under U.S. law, such income will be included in our consolidated
return.

Deferred Acquisition Costs

Costs relating to the production of new business  (primarily
commissions and certain costs of marketing, policy issuance
and underwriting) are deferred and included in the deferred
acquisition cost asset to the extent that such costs are
recoverable from future related policy revenues. For interest-
sensitive annuities and other financial products, deferred
acquisition costs, with interest, are amortized over the lives of
the policies and products in a constant relationship to the
present value of estimated future gross profits, discounted using
the interest rate credited to the policy. Traditional life
insurance deferred acquisition costs are being amortized over the
premium-paying period of the related policies using assumptions
consistent with those used in computing policy benefit reserves.

We review the recoverability of the carrying value of the deferred
acquisition costs each year. For interest-sensitive
annuities and other financial products, we consider estimated
future gross profits in determining whether the carrying value is
appropriate; for other insurance products, we consider estimated
future premiums. In all cases, we consider expected mortality,
interest earned and crediting rates, persistency and expenses.
Amortization is adjusted retrospectively for interest-sensitive
annuities and other financial products when estimates of future
gross profits to be realized are revised.

Present Value of Future Profits

Present value of future profits are recorded in connection
with acquisitions of insurance companies or a block of policies.
The initial value is based on the actuarially determined present
value of the projected future gross profits from the in force
business acquired. In selecting the interest rate to calculate the
discounted present value of the projected future gross profits, we
use the risk rate of return believed to best reflect the
characteristics of the purchased policies, taking into account the
relative risks of such policies, the cost of funds to acquire the
business and other factors. The value of in force insurance
purchased is amortized on a constant yield basis over its
estimated life from the date of acquisition in proportion to the
emergence of profits or the expected premium pattern over a period
of approximately 20 years.

For acquisitions we made on or before November 19, 1992, we
amortize the asset with interest at the same discount rate used
to determine the present value of future profits at the date of
purchase. For acquisitions after November 19, 1992, we amortize
the asset using the interest rate credited to the underlying
policies.

Goodwill

The excess of the cost to acquire purchased companies over the
fair value of net assets acquired ("goodwill") is being
amortized on a straight-line basis over periods that generally
correspond with the benefits expected to be derived from the
acquisitions, usually 20 to 40 years. Accumulated amortization was
$1.4 million and $1.2 million at December 31, 2001 and 2000,
respectively.  We continually monitor  goodwill based on estimates
of future earnings. If we determine that goodwill has been
impaired, the carrying value is reduced with a corresponding
charge to expense.

Stock Options

We recognize compensation expense for our stock option plan using
the intrinsic value method of accounting. Under the
terms of the intrinsic value method, compensation cost is the
excess, if any, of the quoted market price of the stock at the
grant date, or other measurement date, over the amount an employee
must pay to acquire the stock. Under our stock option plans, no
expense is recognized since the exercise price equals or exceeds
the market price at the measurement date.

Reclassifications

Certain amounts in the 2000 and 1999 consolidated financial
statements and notes have been reclassified to conform with
the 2001 presentation. These reclassifications had no effect on
previously reported shareholders' equity or net income in the
periods presented.

Recently Issued Professional Accounting Standards

In June 1998, the Financial Accounting Standards Board
("FASB") issued Statement No. 133, "Accounting for Derivative
Instruments and Hedging Activities" (the Standard).  The Standard
requires companies to record derivatives on the new balance
sheet as assets and or liabilities measured at fair value.  We
adopted the Standard on January 1, 2001.  The adoption of the
Standard had an immaterial impact to net income. Additionally, its
application may increase the volatility of other income and
expense.

In June 2001, the Financial Accounting Standards Board issued
Statements of Financial Accounting Standards No. 141,
"Business Combinations", and No. 142, "Goodwill and Other
Intangible Assets", effective for fiscal years beginning after
December 15, 2001.  Under the new rules, goodwill will no longer
be amortized but will be subject to annual impairment tests in
accordance with the Statements.  Other intangible assets will
continue to be amortized over their useful lives.  We will apply
the new rules on accounting for goodwill and other intangible
assets beginning in the first quarter of 2002.  Application of the
nonamortization provisions of the Statement is expected to result
in an annual increase in net income of $.2 million or $0.02 per
diluted share.  During 2002, we will perform the first of the
required impairment tests of goodwill as of January 1, 2002 and
have not yet determined what the effect of these tests will be on
our earnings and financial position.

2.	Investments

The amortized cost, gross unrealized gains and losses and
estimated fair value of securities available for sale are as
follows (in thousands):

                                       December 31, 2001
                                        Gross     Gross
                            Amortized Unrealized Unrealized  Fair
                               Cost     Gains     Losses     Value

Securities available for
 sale:
  Fixed maturity securities:
    United States Treasury
     securities and
     obligations of United
     States government
     agencies                 $  5,707 $   267   $     7  $  5,967
    Obligations of states
      and political
      subdivisions               1,972     144        --     2,116
    Foreign government
      securities                 1,855     106        34     1,927
    Utilities	                 26,040     153     1,036    25,157
    Corporate bonds	           574,522   9,515    19,812   564,225
    Mortgage-backed securities 319,752   4,223     3,406   320,569
    Redeemable preferred stock   3,000      --        --     3,000
      Total fixed maturity
        securities	           932,848  14,408    24,295   922,961
  Equity securities	                 7      --        --         7
      Total securities
        available for sale	$932,855 $14,408  $ 24,295  $922,968


                                      December 31, 2000
                                        Gross     Gross
                            Amortized Unrealized Unrealized  Fair
                               Cost     Gains     Losses     Value

Securities available for
 sale:
  Fixed maturity securities:
    United States Treasury
     securities and
     obligations of United
     States government
     agencies                 $ 18,098 $   140   $     9  $ 18,229
    Obligations of states
     and political subdivisions  2,116      59        --     2,175
    Foreign government
      securities	             3,348      17       162     3,203
    Utilities	                 26,603      75     1,093    25,585
    Corporate bonds	           484,012   3,832    25,689   462,155
    Mortgage-backed securities 202,890   1,905     2,405   202,390
    Redeemable preferred stock   5,530      --       355     5,175
      Total fixed maturity
        securities	           742,597   6,028    29,713   718,912
  Equity securities	               538       4       180       362
      Total securities
        available for sale	$743,135 $ 6,032   $29,893  $719,274

The estimated fair values for fixed maturity securities are based
on quoted market prices, where available. For fixed
maturity securities not actively traded, fair values are estimated
using values obtained from independent pricing services, or by
discounting expected future cash flows using a current market rate
applicable to the coupon rate, credit rating, and maturity of the
investments.

The amortized cost and estimated fair value of fixed maturity
securities at December 31, 2001 by contractual maturity
are shown below (in thousands). Actual maturities will differ from
contractual maturities because borrowers may have the right
to call or prepay obligations with or without call or prepayment
penalties and because most mortgage-backed securities provide
for periodic payments throughout their lives.



                                      Amortized       Fair
                                        Cost          Value

Due in one year		              $  3,112     $  3,191
Due after one year through five years   124,924      125,196
Due after five years through ten years	315,113      313,807
Due after ten years	                    166,947      157,198
      Subtotal	  	                    610,096      599,392
Redeemable preferred stock	            3,000        3,000
Mortgage-backed securities	          319,752      320,569
      Total fixed maturity securities  $932,848     $922,961



We maintain a highly-diversified investment portfolio with limited
concentration of financial instruments in any given
region, industry or economic characteristic. At December 31, 2001,
we held investments in excess of 10% of our shareholders'
equity in the following issuers:


                            Amortized    Fair
Issuer                         Cost      Value
Viacom Inc                   $10,926    $10,609
Boeing Company                10,851     10,418
Wachovia Corporation          10,772     10,888
BellSouth Corporation         10,628     10,205
Wells Fargo Company           10,470     10,235
Alcoa Aluminio SA             10,400     10,131
JP Morgan Chase & Company     10,218     10,090
General Electric Company      10,193     10,198
PNC Financial Services Group  10,085     10,081
Countrywide Home Loan          9,970      9,935
SBC Communications Inc.        9,965      9,734
Dow Chemical Company           9,903      9,669
US Bancorp                     9,802      9,883
Household International Inc    9,734      9,692
Target Corporation             9,127      8,849
Verizon Communications         8,238      8,211
Suntrust Banks Inc.            8,123      8,093
Coca-Cola Enterprises Inc      8,023      7,847
Mirant Corporation             8,015      7,160
Southern Company               8,009      7,857

All of the above issuers are rated investment grade by Standard &
Poor's Corporation as of December 31, 2001.


Net investment income was attributable to the following (in
thousands):


                                      Year Ended December 31
                                  2001       2000        1999

Fixed maturity securities       $57,659     $48,623     $39,625
Mortgage loans on real estate	      673         930         947
Policy loans	                     894         925         960
Real estate	                      30          30          33
Short-term investments and other	 964         847       2,619
  Gross investment income	   60,220      51,355      44,184
Less: investment expenses	    1,220         579         572
  Net investment income	       $59,000     $50,776     $43,612

Net realized investment gains (losses) were attributable to the
following (in thousands):

                                      Year Ended December 31
                                  2001       2000        1999

Fixed maturity securities
  available for sale:
  Gross realized gains	       $ 4,363     $ 1,545    $ 2,000
  Gross realized losses	        (9,175)     (1,854)    (1,415)
  Other than temporary decline
    in fair value	             (4,229)     (3,048)       (15)
     Net	                       (9,041)     (3,357)       570
  Other losses	                  (2,093)     (1,135)      (492)
     Net realized investment
       gains (losses)	      $(11,134)    $(4,492)   $    78

Life insurance companies are required to maintain certain amounts
of assets with state or other regulatory
authorities. At December 31, 2001, fixed maturity securities of
$8.4 million and cash and short-term investments of $.4
million were held on deposit by various state regulatory
authorities in compliance with statutory regulations.
Additionally, fixed maturity securities of $.7 million, short-term
investments of $2.2 million and account assets of Standard
Management International were held by a custodian bank approved by
the Luxembourg regulatory authorities to comply with local
insurance laws.

Comprehensive income excludes reclassification adjustments
for net realized investment gains (losses) after
income taxes (benefits) of  $.2 million, ($2.2) million and $.4
million in 2001, 2000 and 1999, respectively.  The income
tax rate used for comprehensive income is 34%.


3.	Deferred Acquisition Costs and Present Value of Future
Profits

The activity related to deferred acquisition costs is summarized
as follows (in thousands):



                                        Year Ended December 31
                                      2001        2000      1999

Balance, beginning of year	      $ 91,855    $67,811   $32,946

  Additions	                       38,854     35,138    27,817
  Amortization 	                  (6,943)    (6,419)   (4,580)
  Adjustment relating to net
    unrealized (gain) loss on
    securities available for sale	   (3,384)    (4,675)   11,628
Balance, end of year	           $120,382    $91,855   $67,811

The activity related to present value of future profits is
summarized as follows (in thousands):

                                        Year Ended December 31
                                      2001        2000      1999

Balance, beginning of year	      $ 26,343    $30,688   $28,793
  Adjustments related to
    acquisitions    	                 --         --      (949)
  Interest accreted on unamortized
    balance	                        3,169      3,472     3,890
  Amortization	                       (5,263)    (6,226)   (6,517)
  Adjustments relating to net
    unrealized (gain) loss on
    securities available for sale	   (1,980)    (1,591)    5,471
Balance, end of year	           $ 22,269    $26,343   $30,688

The percentages of future expected net amortization of the
beginning balance of the present value of future
profits, before the effect of net unrealized gains and losses, are
expected to be between 10% and 12% in each of the years
2002 through 2006. Future net amortization is based on the present
value of future profits at December 31, 2001 and
current assumptions as to future events on all policies in force.

The discount rate used to calculate the present value of future
profits reflected in our consolidated balance sheets
at December 31, 2001, ranged from 8% to 18%.

4.Mortgage Payable, Notes Payable and Trust Preferred
Securities

Mortgage payable, notes payable and trust
preferred securities were as follows (in thousands):

                                 Interest        December 31
                                   Rate         2001     2000

Mortgage payable                  7.375%      $ 6,900  $    --
Notes payable:
  Borrowings under revolving
    credit agreements	          5.30% (1)  $ 8,100  $20,500
  Senior subordinated notes 	    10.00%       11,000   11,000
                                              $19,100  $31,500

Trust preferred securities 	    10.25%      $20,700  $    --

(1) Current weighted average rate at December 31, 2001.

Mortgage Payable

On December 28, 2001 we signed a promissory note due December
31, 2011 in the principal amount of $6.9 million. The
note bears interest at 7.375% per annum and is payable in equal
monthly installments of fifty-six thousand dollars on the fifth
day of each calendar month. The note may be prepaid in whole or in
part at our option commencing on or before January 1,
2005 at a redemption price equal to 105% of the principal amount
(plus accrued interest) and declining to 101% of the
principal amount (plus accrued interest) if prepayment is made
after January 1, 2008.  The note and all amounts due are
secured by a mortgage that conveys a first mortgage security
interest in certain real and personal property we own.

Borrowings Under Revolving Credit Agreements

We have outstanding borrowings at December 31, 2001 pursuant to
the Amended Credit Agreement of $8.1 million
in the form of a four-year reducing revolving loan arrangement and
have agreed to pay a non-use fee of .50% per annum on
the unused portion of the commitment. Borrowings under the Amended
Credit Agreement may be used for contributions to
surplus of insurance subsidiaries, acquisition financing and
repurchases of Common Stock.  The debt is secured by a Pledge
Agreement of all of the issued and outstanding shares of Common
Stock of Standard Life and Standard Marketing. Interest
on the borrowings under the Amended Credit Agreement is
determined, at our option, to be: (1) a fluctuating rate of
interest to the corporate base rate announced by the bank
periodically, plus 1% per annum, or (2) a rate at London Inter-
Bank Offered Rate ("LIBOR") plus 3.25%.  The repayment schedule
includes $.6 million due March 2002 and $2.5 million each year
thereafter to March 2005.  Indebtedness incurred under the Amended
Credit Agreement is subject to certain restrictions and
covenants including, among other things, certain minimum financial
ratios, minimum consolidated equity requirements, positive
net income, minimum statutory surplus requirements for our
insurance subsidiaries and certain limitations on acquisitions,
additional indebtedness, investments, mergers, consolidations and
sales of assets.

Standard Management International has an unused line of credit of
$1.5 million, with no borrowings in connection
with this line of credit in 2001 or 2000.

Senior Subordinated Note

On October 31, 2000, we issued a Senior Subordinated Note due
October 31, 2007 in the principal amount of $11
million.  The note bears interest equal to 1) a fixed rate of 10%
per annum; or 2) six month LIBOR plus 150 basis points;
whichever is higher.  Interest payments are payable in cash semi-
annually on April 30 and October 31 of each year.  The note
may be prepaid in whole or in part at our option commencing on
November 1, 2001 at a redemption price equal to 105% of
the principal amount (plus accrued interest) and declining to l00%
of the principal amount (plus accrued interest) on November
1, 2005.  The note may be prepaid beginning November 1, 2001 at a
redemption price equal to l00% of the principal amount
(plus accrued interest) under certain limited circumstances.  The
note is subject to certain restrictions and covenants
substantially similar to those in the Amended Credit Agreement.
The holder also received a warrant to purchase 220,000
shares of our common stock at a purchase price of $4.00 per share
for a period of seven years.

The proceeds of the Senior Subordinated Note were used to repay
the Senior Subordinated Convertible Notes of $10
million at a redemption price of 105% of the principal balance
plus accrued interest.  The extraordinary loss of $.4 million, net
of tax, in 2000 reflects the early extinguishment of the Senior
Subordinated Convertible Notes.  These notes were convertible
at any time at the option of the note holders into our common
stock at the rate of $5.747 per share or a total of 1,740,038
shares.

Trust Preferred Securities

On August 9, 2001, SMAN Capital Trust I (the "Trust"), a wholly-
owned subsidiary of Standard Management,
completed a public offering of $20.7 million of its 10.25%
preferred securities, which mature on August 9, 2031, at $10 per
preferred security. Distributions are classified as interest
expense. The Trust used the proceeds of this offering to purchase
Standard Management's 10.25% junior subordinated debentures.  Net
proceeds from the sale of the debentures of
approximately $19.3 million were used to redeem our Series A
preferred stock of  $6.5 million and repay $7.3 million of our
notes payable.  The remaining proceeds were used for general
corporate purposes.

The terms of the preferred securities parallel the terms of the
debentures which are the sole assets of the Trust.  The
preferred securities may be redeemed at any time on or after
August 9, 2006 at a redemption price of $10 plus accumulated
and unpaid distributions.   If the Trust redeems the preferred
securities or is liquidated and the debentures are not redeemed,
debentures will be distributed to the holders of the preferred
securities rather than cash.  Standard Management guarantees
the payments on these securities to the extent that the Trust has
available funds.

The Trust's preferred securities are traded on the NASDAQ National
Market under the symbol "SMANP".

Interest Paid

Cash paid for interest was  $2.5 million, $3.6 million and $3.4
million in  2001,  2000 and 1999 , respectively.


5.	Income Taxes

The components of the federal income tax expense, applicable to
pre-tax income before extraordinary loss, were as
follows (in thousands):

                             Year Ended December 31
                        2001          2000          1999

Current taxes	       $   892        $   --        $  151
Deferred taxes
  (benefit)              (882)          778         1,975
                      $    10        $  778        $2,126

The effective tax rate on pre-tax income is lower than the
statutory corporate federal income tax rate as follows (in
thousands):

                                          Year Ended December 31
                                          2001     2000     1999

Federal income tax expense at statutory
 rates (34%)	                          $  608   $2,177   $2,515
Operating income in our consolidated
 return offset by NOL carryforwards	   (447)  (1,152)    (219)
Other items, net	                       (151)    (247)    (170)
  Federal income tax expense	           $   10   $  778   $2,126
Effective tax rate                            1%      12%      29%

We recovered  $.3 million and $.3 million and in federal income
taxes in  2000 and 1999, respectively, and paid federal
income taxes of  $.2 million in 2001.

Deferred income taxes reflect the net tax effects of temporary
differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the amounts used
for tax return purposes. Significant temporary differences
included
in the our deferred tax assets (liabilities) are as follows (in
thousands):

                                               December 31
                                              2001        2000

Deferred income tax assets:
  Future policy benefits	                   $ 34,013    $ 18,898
  Unrealized loss on securities
    available for sale	                      3,991      10,220
  Capital and net operating loss
    carryforwards	                           2,482       3,042
  Other-net	                                  474       1,298
    Gross deferred tax assets	                40,960      33,458
  Valuation allowance for deferred tax
    assets	                               (2,844)     (5,653)
    Deferred income tax assets, net of
      valuation allowance	                38,116      27,805
Deferred income tax liabilities:
  Present value of future profits	           (7,571)     (8,956)
  Deferred policy acquisition costs	     (36,937)    (23,246)
    Total deferred income tax liabilities	(44,508)    (32,202)
  Net deferred income tax liabilities	    $ (6,392)   $ (4,397)

We are required to establish a "valuation allowance" for any
portion of its deferred tax assets, which are unlikely to be
realized.  The valuation allowance for deferred tax assets
includes $1.6 million at December 31, 2001 with respect to
deferred tax assets and net tax operating loss carryforwards of
acquired companies.

As of December 31, 2001, Standard Management and its
noninsurance subsidiaries had consolidated net operating loss
carryforwards of approximately $4.6 million for tax return
purposes, which expire from 2008 through 2018.  These
carryforwards will only be available to reduce the taxable income
of Standard Management.  At December 31, 2001, the Standard Life
consolidated return had net capital loss carryforwards of
approximately $7.2 million which expire in 2006. These
carryforwards will only be available to reduce the taxable capital
gains of the Standard Life consolidated return.  At December 31,
2001, Premier Life (Luxembourg) had accumulated corporate income
tax loss carryforwards of approximately $1.4 million, all of which
may be carried forward indefinitely.

6.	Shareholders' Equity

Redeemable Preferred Stock

Shareholders have authorized 1,000,000 shares of Preferred Stock.
Other terms, including preferences, voting and
conversion rights, may be established by the Board of Directors.

We authorized 130,000 shares of preferred stock as Series A
convertible redeemable preferred ("Series A preferred
stock"). We issued 65,300 shares in 1998 with a stated value of
$6.5 million ($100 per share) and redeemed these shares in 2001.

Treasury Stock

We did not purchase any shares of treasury stock in 2001 under our
stock repurchase program.  However, we purchased
240,000 and 92,124 shares of treasury stock for $.8 million and
$.6 million in 2000 and 1999, respectively under our stock
repurchase program.  At December 31, 2001, we were authorized to
purchase an additional 724,790 shares under this program.

Warrants

The following table represents outstanding warrants to purchase
common stock as of December 31, 2001:


                                      Exercise    Warrants
Issue Date     Expiration Date         Price    Outstanding

November 1995   November 2002          4.5238      31,500
July 1996       July 2003              4.3750      30,000
April 1997      April 2004             5.1250      12,000
August 1998     August 2005            7.1250      20,000
January 1999    January 2002           6.6250      89,750
January 2000    January 2003           4.8750     128,500
October 2000    October 2003           4.0000      15,000
October 2000    October 2007           4.0000     220,000
January 2001    January 2004           3.0000     170,000
                                                  716,750

Changes in Shares of Common Stock and Treasury Stock

The following table represents changes in the number of common and
treasury shares as of December 31:

                                  2001         2000        1999
Common Stock (Authorized  -
 20,000,000 shares):
  Balance, beginning of year    9,038,134   9,038,134   8,802,313
    Issuance of common stock        1,337          --     235,821
  Balance, end of year          9,039,471   9,038,134   9,038,134

Treasury Stock:
  Balance, beginning of year   (1,492,978) (1,252,978) (1,160,854)
    Treasury stock acquired            --    (240,000)    (92,124)
Balance, end of year           (1,492,978) (1,492,978) (1,252,978)


Unrealized Gain (Loss) on Securities

The components of the unrealized gain (loss) on securities
available for sale in shareholders' equity are summarized as
follows (in thousands):

                                               December 31
                                               2001      2000

Fair value of securities available for sale	$922,961  $719,274
Amortized cost of securities available for
  sale	                                    932,848   743,135
  Gross unrealized loss on securities
    available for sale	                      (9,887)  (23,861)
Adjustments for:
  Deferred acquisition costs	                  2,468     5,852
  Present value of future profits	             1,410     3,389
  Deferred federal income taxes	             2,080     4,977
    Net unrealized loss on securities
      available for sale	                    $ (3,929) $ (9,643)

Foreign Exchange Translation Adjustment

The foreign exchange translation adjustment was ($2.2)
million and ($2.4) million at December 31, 2001 and 2000,
respectively.

7.	Stock Option Plan

We have a non-qualified Stock Option Plan (the "Plan") under which
$2.5 million shares of Common Stock are reserved
for grants of stock options to employees and directors. The
purchase price per share specified in any Plan option must be at
least equal to the fair market value of common stock at the grant
date. Options generally become exercisable over a three-year
period and have a term of 10 years. The Plan is administered by
our Board of Directors. The terms of the options, including the
number of shares and the exercise price, are subject to the sole
discretion of the Board of Directors.  A total of 12,145 shares
are available for future issuance for the Plan as of December 31,
2001.

The provisions of SFAS No. 123, "Accounting for Stock-Based
Compensation", allows companies to either expense the
estimated fair value of stock options or to continue their current
practice and disclose the pro forma effects on net income and
earnings per share had the fair value of the options been
expensed. We have elected to continue our practice of recognizing
compensation expense for our Plan using the intrinsic value based
method of accounting and to provide the required pro forma
information. Plan compensation cost based on fair value at the
grant date, which is consistent with the provisions of SFAS No.
123, would result in pro forma net income and pro forma earnings
per share of the following (in thousands, except per share
amounts):


                                          Year Ended December 31
                                         2001      2000      1999
Net income                              $  877    $4,328    $3,640
Earnings per share                         .07       .49       .41
Earnings per share, assuming dilution      .07       .49       .41

The fair value of each option grant is estimated on the date of
grant using the Black-Scholes option-valuation model with
the following weighted-average assumptions:

                                 2000         1999          1998

Risk-free interest rates	        5.1%         6.2%          5.6%
Volatility factors	             .64          .57           .59
Weighted average expected life  7 years     7 years       7 years

The Black-Scholes option-valuation model was developed for use in
estimating the fair value of traded options that have
no vesting restrictions and are fully transferable.  In addition,
option valuation models require the input of highly subjective
assumptions including the expected stock price volatility.  Our
employee stock options have characteristics significantly
different from those of traded options, and changes in subjective
assumptions can materially affect the fair value estimate,
therefore in management's opinion, the existing models do not
provide a reliable single measure of the fair value of its
employee stock options.

A summary of our stock option activity and related information for
the years ended December 31, 2001, 2000 and 1999
is as follows:



                          2001            2000          1999
                            Weighted-       Weighted-    Weighted-
                             Average         Average     Average
                            Exercise        Exercise     Exercise
                    Shares  Price   Shares  Price  Shares  Price

Options outstanding,
 beginning of year 2,398,258 $6.09 2,411,882 $6.10 1,891,287 $6.15
Exercised	            (1,575) 4.55      (525) 4.17   (19,163) 4.45
Granted	            84,300  4.07     7,500  4.58   633,300  6.15
Expired or forfeited (19,050) 6.03   (20,599) 5.98   (93,542) 7.91
Options outstanding,
  end of year	    2,461,933  6.03 2,398,258  6.09 2,411,882  6.10
Options exercisable,
  end of year	    2,406,733       2,190,658       1,973,799
Weighted-average
  fair value of
  options granted
  during the year  $    2.71       $    2.93       $    3.94

Information with respect to stock options outstanding at December
31, 2001 is as follows:


                   Options Outstanding         Options Exercisable
                         Weighted-
                          Average    Weighted-           Weighted-
   Range of              Remaining    Average              Average
   Exercise    Number   Contractual  Exercise   Number    Exercise
   Prices   Outstanding Life (years)   Price   Exercisable Price

   $ 3-5      391,150        5        $ 4.28     351,283   $4.37
     5-7    1,598,400        6          6.06   1,583,067    6.07
     7-9      454,533        4          7.28     454,533    7.28
    9-11       17,850        2          9.43      17,850    9.43
            2,461,933                          2,406,733

8.	Reinsurance

Our U.S. insurance subsidiaries have entered into reinsurance
agreements with non-affiliated companies to limit the net
loss arising from large risks, maintain their exposure to loss
within capital resources, and provide additional capacity for
future growth.  The maximum amount of life insurance face amount
retained on any one life ranges from $30,000 to $150,000.  Amounts
of standard risk in excess of that limit are reinsured.

Reinsurance premiums ceded to other insurers were $6.3 million,
$4.8 million and $23.3 million in 2001, 2000 and 1999,
respectively.  Reinsurance ceded has reduced benefits and claims
incurred by  $5.9 million, $6.3 million and $2.7 million in 2001,
2000 and 1999, respectively.  A contingent liability exists to the
extent any of the reinsuring companies are unable to meet their
obligations under the reinsurance agreements.  To minimize
exposure to significant losses from reinsurance insolvencies, the
Company evaluates the financial condition of its reinsurers and
monitors concentrations of credit risk arising from similar
geographic regions, activities or economic characteristics of the
reinsurers.  Based on its periodic reviews of these companies, the
Company believes the assuming companies are able to honor all
contractual commitments under the reinsurance agreements.


At December 31, 2001 SCOR Life U.S. Insurance Company, our largest
annuity reinsurer, which is rated "A" (Excellent)
by A.M. Best, represented $20.6 million, or 66% of our total
reinsurance recoverable.

On July 1, 1998, Savers Life's Medicare supplement business was
sold to Oxford Life Insurance Company ("Oxford
Life") through a quota share reinsurance agreement.  Under the
terms of the reinsurance agreement, Standard Life administered
the Medicare supplement business through October 1, 1999 and
received administration fee income.  Effective December 31, 1998,
Standard Life replaced Savers Life as a party to this reinsurance
agreement and became responsible for the administration of the
Medicare supplement business.  Effective December 1, 1999, the
assumption of the business was effected by Oxford Life.

9.  	Related Party Transactions

On October 28, 1997, we made an interest-free loan to one of our
officers. The principal balance of the loan was
$775,500 at December 31, 2001 and 2000, respectively.  Repayment
is due within 10 days of voluntary termination or resignation
as an officer.  In the event of a termination of the officer's
employment following a change in control, the loan is deemed to be
forgiven.

Certain officers and directors have purchased 31,000 shares, or
$3.1 million of the Series A preferred stock as described
in Note 6.  These shares were purchased in connection with a loan
agreement of $2.6 million, which we guaranteed. We redeemed these
shares in 2001.

10.	Commitments and Contingencies

Lease Commitments

We rent office and storage space under noncancellable operating
leases and we  incurred rent expense for operating leases
of  $.8 million, $1.0 million and $1.1 million in 2001, 2000 and
1999, respectively.

Future required minimum rental payments, by year and in the
aggregate, under operating leases as of December 31, 2001,
are as follows (in thousands):

2002		                    $        939
2003		                             683
2004		                             578
2005		                             367
2006		                             170
Total minimum lease payments	$      2,737

Employment Agreements

Certain officers are employed pursuant to executive employment
agreements that create certain liabilities in the event of
the termination of the covered executives following a change in
control of Standard Management. The commitment under these
agreements is approximately three times their current annual
salaries. Additionally, following termination due to a change in
control, each executive is entitled to receive a lump sum payment
equal to all unexercised stock options granted multiplied by the
highest per share fair market value during the six month period
ending on the date of termination. There were unexercised options
outstanding to these executives to buy 1,852,880 shares at
December 31, 2001.

11.	Litigation

We are involved in various legal proceedings in the normal course
of business. In most cases, such proceedings involve
claims under insurance policies or other contracts of Standard
Management. The outcomes of these legal proceedings are not
expected to have a material adverse effect on the consolidated
financial position, liquidity or future results of operations of
Standard Management based on our current understanding of the
relevant facts and law.

12.	Statutory Accounting Information of Subsidiaries

Our U.S. life insurance subsidiaries maintain their records in
conformity with statutory accounting practices prescribed
or permitted by state insurance regulatory authorities. Statutory
accounting practices differ in certain respects from GAAP.  In
consolidation, adjustments have been made to conform our domestic
subsidiaries' accounts with GAAP.

Our U.S. life insurance subsidiaries had consolidated statutory
capital and surplus of $43.9 million at December 31, 2001
and 2000, respectively.  Consolidated net income of the life
insurance subsidiaries on a statutory basis, after elimination of
subsidiaries' intercompany accounts was  $.1 million, $1.5 million
and $.9 million for the years ended December 31, 2001, 2000
and 1999, respectively.  Minimum statutory capital and surplus
required by the Indiana Insurance Code was $.5 million as of
December 31, 2001.

State insurance regulatory authorities impose minimum risk-based
capital requirements on insurance enterprises that were
developed by the NAIC.  The formulas for determining the amount of
risk-based capital ("RBC") specify various weighting factors
that are applied to financial balances or various levels of
activity based on the perceived degree of investment and insurance
risks.  Regulatory compliance is determined by a ratio (the
"Ratio") of the enterprise's regulatory total adjusted capital, as
defined by the NAIC, to its authorized control level RBC, as
defined by the NAIC.  Enterprises below specific trigger points or
ratios are classified within certain levels, each of which
requires specified corrective action.  At December 31, 2001, the
RBC Ratios of Standard Life and Dixie Life were both at least two
times greater than the levels at which company action is required.

The statutory capital and surplus for Premier Life (Luxembourg)
was  $5.5 million and $6.5 million at fiscal years ended
2001 and 2000, respectively, and minimum capital and surplus under
local insurance regulations was $2.2 million at fiscal years
ended 2001 and 2000, respectively.  The statutory capital and
surplus for Premier Life (Bermuda) was  $3.6 million and  $3.8
million at fiscal years ended 2001 and 2000, respectively, and
minimum capital and surplus under local insurance regulations was
$.3 million at fiscal years ended 2001 and 2000, respectively.
Standard Management International dividends are limited to its
accumulated earnings without regulatory approval. Standard
Management International and Premier Life (Luxembourg) were not
permitted to pay dividends under Luxembourg law in 2001 and 2000
due to accumulated losses.

Codified statutory accounting practices  ("Codification") by The
National Association of Insurance Commissioners
("NAIC") was implemented January 1, 2001.  Codification changes,
to some extent, prescribed statutory accounting practices
which we use to prepare our statutory-basis financial statements.
However, the impact of codification was not material to our
statutory-basis financial statements.

We loaned $27.0 million to Standard Life pursuant to an Unsecured
Surplus Debenture Agreement ("Surplus Debenture")
which requires Standard Life to make quarterly interest payments
at a variable corporate base rate plus 2% per annum, and annual
principal payments of $1.0 million per year beginning in 2007 and
concluding in 2033.  As required by state regulatory authorities,
the balance of the surplus debenture at December 31, 2001 and 1999
of $27.0 million is classified as a part of capital and surplus
of Standard Life.  The interest and principal payments are subject
to quarterly approval by the Indiana Department of Insurance
depending upon satisfaction of certain financial tests relating to
levels of Standard Life's capital and surplus and general approval
of the Commissioner of the Indiana Department of Insurance.

Our ability to pay operating expenses and meet debt service
obligations is partially dependent upon the amount of
dividends received from Standard Life.  Standard Life's ability to
pay cash dividends is, in turn, restricted by law or subject to
approval by the insurance regulatory authorities of Indiana.
Dividends are permitted based on, among other things, the level of
the preceding year statutory surplus and net income.  In 2001,
Standard Life paid dividends of $1.6 million. During 2002,
Standard Life can pay dividends of $4.4 million without regulatory
approval; however, the payment of dividends will require approval
from SCOR Life U.S. Insurance Company, a reinsurer of Standard
Life.

13.	Operations by Business Segment

Our reportable segments are as follows:

Domestic Operations includes revenues earned and expenses incurred
from United States operations and includes deposits
and/or income from annuity products (primarily flexible premium
deferred annuities, equity indexed products, universal life
products and traditional life products).  The profitability for
this segment primarily depends on the investment spread earned
(annuities and universal life), the persistency of the in force
business, claim experience and expense management.

International Operations includes revenues earned and expenses
incurred from abroad, primarily Europe, and includes
fees collected on deposits from unit-linked products.  The
profitability for this segment primarily depends on the amount of
separate account assets under management, the management fee
charged on those assets and expense management.

The accounting policies of the segments are the same as described
in Note 1 (Summary of Significant Accounting
Policies).  The following segment presentation contains the same
operating data and results the Company uses to evaluate the
performance of the business and provides reconciliations to
consolidated totals (in thousands):

                                      Year Ended December 31
                                   2001         2000      1999
Revenues:
  Domestic	                $   66,770  $    61,800 $   65,768
  International	                8,586        8,267      4,486
    Consolidated Revenues	 $   75,356  $    70,067 $   70,254
Net Investment Income:
  Domestic	                $   58,539  $    50,278 $   43,167
  International	                  461          498        445
    Consolidated Net Investment
      Income	                $   59,000  $    50,776 $   43,612
Interest Credited to Interest
  Sensitive Annuities and Other
  Financial Products
  (All Domestic)	           $   30,227  $   21,335  $   25,728
Pre-tax Income:
  Domestic	                $      409  $    3,276  $    6,132
  International	                1,381       3,128       1,266
    Consolidated Pre-tax
      Income                   $    1,790  $    6,404  $    7,398
Assets:
  Domestic	                $1,177,323  $  921,727  $  811,653
  International	              430,330     548,730     339,324
    Consolidated Assets	      $1,607,653  $1,470,457  $1,150,977

Revenues by product have not been disclosed because it is
impracticable for us to provide this information.  Although
premiums and deposits collected by product are available on a
statutory basis, it is impracticable to disclose revenues by
product on a GAAP basis because we do not allocate certain
components of revenues such as net investment income, net realized
investment gains (losses) and fee and other income to our
products.

14. 	Derivative Financial Instruments

We offer equity-indexed annuity products that provide a base rate
of return with a higher potential return linked to the
performance of a broad-based equity index.  We buy Standard &
Poor's 500 Index Call Options and Dow Jones Industrial Average
Call Options (collectively known as "the options") in an effort to
hedge potential increases to policyholder benefits resulting from
increases in the S&P 500 and Dow Jones Indexes to which the
products' returns are linked. The cost of the options is included
in the pricing of the equity-indexed annuity products.  The
changes in the value of the options are reflected in net
investment income and fluctuate in relation to changes in interest
credited to policyholder account balances for these annuities.
Premiums paid to purchase these instruments are deferred and
amortized over their term.

Total revenues include  ($5.9) million, ($7.6) million and $1.2
million in 2001, 2000 and 1999, respectively, related to
changes in the fair value of the options.  Such investment income
(loss) was substantially offset by amounts credited to
policyholder account balances.  The fair value of the options was
$3.5 million and $1.9 million at December 31, 2001 and 2000,
respectively.  The notional amounts at December 31, 2001 and 2000
were $151.9 million and $123.4 million, respectively.

If the counterparties of the aforementioned financial instruments
do not meet their obligations, we may have to recognize
a loss.  We limit our exposure to losses by diversifying among
several counterparties believed to be strong and creditworthy.  At
December 31, 2001, all of the counterparties were rated "A" or
higher by Standard & Poor's.

15.	Fair Value of Financial Instruments

The following discussion outlines the methods and assumptions we
use in estimating our fair value disclosures for our
financial instrument assets and liabilities.  Because fair values
for all balance sheet items are not required to be disclosed
pursuant to SFAS No. 107, "Disclosures about Fair Values of
Financial Instruments", the aggregate fair value amounts presented
herein do not necessarily represent our  underlying value,
likewise, care should be exercised in deriving conclusions about
our business or financial condition based on this fair value
information.

Fixed maturity securities: Fair values for fixed maturity
securities are based on quoted market prices from broker-dealers,
where available.  For fixed maturity securities not actively
traded, fair values are estimated using values obtained from
independent pricing services, or, in the case of private
placements, are estimated by discounting the expected future cash
flows using current market rates applicable to the coupon rate,
credit rating and maturity of the investments.

Equity securities: The fair values for equity securities are
based on the quoted market prices.

Derivative securities: The fair values for derivative securities
are based on internal methods developed by our investment
advisor.

Mortgage loans and policy loans: The estimated fair values for
mortgage loans and policy loans are estimated using
discounted cash flow analyses and interest rates currently being
offered for similar loans to borrowers with similar credit
ratings.

Assets and liabilities held in separate accounts: Fair values for
the assets held in separate accounts are determined from
broker-dealers or valuations supplied by internationally
recognized statistical rating organizations.  The separate account
liability represents our obligations to policyholders and
approximates fair value.

Insurance liabilities for investment contracts: Fair values for
our investment-type insurance contract liabilities are
estimated using discounted cash flow calculations, based on
interest rates currently being offered for similar contracts with
maturities consistent with those remaining contracts being valued.
The estimated fair value of the liabilities for investment
contracts was approximately equal to its carrying value at
December 31, 2001 and 2000.  This is due to 1) credited rates on
the vast majority of account balances approximating current rates
paid on similar investments and 2) rates not generally being
guaranteed beyond one year.

Insurance liabilities for non-investment contracts: Fair value
disclosures for our reserves for insurance contracts other
than investment-type contracts are not required and have not been
determined.  However, we closely monitor the level of our
insurance liabilities and the fair value of reserves under all
insurance contracts are taken into consideration in the overall
management of interest rate risk.

Mortgage payable, notes payable and trust preferred securities: We
believe the fair value of our long-term debt was
equal to its carrying value at December 31, 2001 and 2000 since
the interest rates reflect current market conditions.

The carrying amount of all other financial instruments
approximates their fair values.

The fair value of our financial instruments is shown below using a
summarized version of assets and liabilities at December
31, 2001 and 2000 (in thousands).  Refer to Note 3 for additional
information relating to the fair value of investments.



                                     December 31
                               2001                 2000
                         Fair      Carrying     Fair     Carrying
                         Value      Amount      Value     Amount
Assets:
  Investments:
    Securities available
     for sale:
      Fixed maturity
       securities	     $922,961   $922,961   $718,912   $718,912
      Equity securities	       7          7        362        362
    Mortgage loans on
      real estate	        5,269      5,023      4,931      4,778
    Policy loans	       12,609     13,034     13,591     14,280
    Other invested assets	776        776        776        776
    Short-term investments 15,417     15,417     12,489     12,489
  Cash		            22,935     22,935      1,840      1,840
  Assets held in separate
    accounts	           401,097    401,097    520,439    520,439
Liabilities:
  Insurance liabilities
    for investment
    contracts             926,539    926,539    695,475    695,475
  Mortgage payable          6,900      6,900         --         --
  Notes payable	       19,100     19,100     31,500     31,500
  Trust preferred
    securities             20,700     20,700         --         --
  Liabilities related to
    separate accounts	 401,097    401,097    520,439    520,439


16.	Earnings Per Share

A reconciliation of income and shares used to calculate basic and
diluted earnings per share is as follows (dollars in
thousands):


                               2001         2000        1999
Income:
  Net Income	            $    1,780   $    5,267  $    5,272
  Preferred stock dividends      (318)        (506)       (506)
  Income available to common
    shareholders for basic
    earnings per share          1,462        4,761       4,766
  Effect of dilutive securities:
    Interest on subordinated
      convertible debt	          --          833       1,000
  Income available to common
    shareholders for diluted
    earnings per share     $    1,462   $    5,594  $    5,766

Shares:
  Weighted average shares
    outstanding for basic
    earnings per share	   7,545,889    7,727,344   7,583,086
  Effect of dilutive
    securities:
    Stock options	           81,221        6,081     136,656
    Stock warrants	          138,268          492      93,951
    Subordinated convertible
      debt	                    --    1,450,032   1,740,038
    Dilutive potential common
      shares	               219,489    1,456,605   1,970,645
  Weighted average shares
    outstanding for diluted
    earnings per share	   7,765,378    9,183,949   9,553,731



17.	Quarterly Financial Data (Unaudited) (in thousands, except
per share amounts)

Earnings per common and common equivalent share for each quarter
are computed independently of earnings per share
for the year.  Due to the transactions affecting the weighted
average number of shares outstanding in each quarter and due to
the uneven distribution of earnings during the year, the sum of
the quarterly earnings per share may not equal the earnings per
share for the year.

                                      2001 Quarters
                           First     Second    Third     Fourth

Total revenues	           $19,072   $22,543   $17,081   $16,660
Components of net income:
  Operating income	      $ 1,986   $ 2,095   $ 1,986   $ 1,262
  Net realized investment
    gains (losses)	           14      (161)   (1,645)   (3,757)

  Net income (loss)	      $ 2,000   $ 1,934   $   341   $(2,495)

Net income per common
  share	                $   .26   $   .26   $   .05   $  (.33)
Net income per common
  share, assuming
  dilution	           $   .24   $   .23   $   .04   $  (.33)

                                       2000 Quarters
                           First     Second    Third     Fourth

Total revenues	           $18,487   $15,973   $18,526   $17,080
Components of net income:
  Operating income	      $ 1,628   $ 1,523   $ 1,976   $ 2,206
  Net realized investment
    losses	              (263)     (515)     (220)     (709)

  Income before
    extraordinary loss	   1,365     1,008     1,756     1,497
  Extraordinary loss	      --        --        --       359
  Net income	           $ 1,365   $ 1,008   $ 1,756   $ 1,138

Net income per common
  share	                $   .18   $   .13   $   .23   $   .14
Net income per common
  share, assuming
  dilution	           $   .17   $   .13   $   .20   $   .16

Reporting the results of insurance operations on a quarterly basis
requires the use of numerous estimates throughout the
year, primarily in the computation of reserves, amortization of
deferred policy acquisition costs and present value of future
profits, and the effective rate for income taxes.  It is our
practice to review estimates at the end of each quarter and, if
necessary, make appropriate adjustments, with the effect of such
adjustments being reported in current operations.  Only at year-
end are we able to assess the accuracy of its previous quarterly
estimates.  Our fourth quarter results include the effect of the
difference between previous estimates and actual year-end results.
Therefore, the results of an interim period may not be indicative
of the results of the entire year.

    Schedule II -- Condensed Financial Information of Registrant

                  STANDARD MANAGEMENT CORPORATION
                           (PARENT COMPANY)

                      CONDENSED BALANCE SHEETS
          (Dollars in Thousands, Except Per Share Amounts)

                                                  December 31
                                                2001       2000
                ASSETS
Investments:
  Investment in subsidiaries	                $ 78,646   $ 71,728
  Surplus debenture due from Standard Life	   27,000     27,000
  Fixed maturity securities, at fair value
    (amortized cost: $0 in 2001 and $900
    in 2000)	                                     --        775
  Equity securities available for sale,
    at fair value (cost: $7 in 2001 and $35
    in 2000)	                                      7          8
  Real estate	                                    115        123
  Notes receivable from officers and directors	 776        776
      Total investments	                      106,544    100,410
Cash	                                              339        305

Property and equipment, less depreciation of
  $2,171 in 2001 and $1,518 in 2000             11,665      1,148
Note receivable from affiliate	              2,858      2,858
Amounts receivable from subsidiaries	         3,148      2,414
Other assets	                                  1,563      1,463
      Total assets	                          $126,117   $108,598

LIABILITIES AND SHAREHOLDERS' EQUITY

Liabilities:
  Notes payable	                          $ 19,100   $ 31,500
  Note payable to affiliate	                   2,858      2,858
  Capital lease obligations	                   1,152         --
  Mortgage payable	                             6,900         --
  Amounts due to subsidiaries	                   3,148      2,414
  Other liabilities	                             2,070      2,397
      Total liabilities	                       35,228     39,169

Company-obligated trust preferred securities	   20,700         --

Class A convertible redeemable preferred stock,
  par value $100 per share                          --      6,530

Shareholders' Equity:
  Preferred stock, no par value                     --         --
  Common stock and additional paid-in capital,
    no par value	                            63,011     63,019
  Treasury stock, at cost                       (7,589)    (7,589)
  Accumulated other comprehensive loss:
    Unrealized loss on securities of
      subsidiaries	                            (3,927)    (9,640)
    Foreign currency translation adjustment
      of subsidiaries                           (2,245)    (2,368)
  Retained earnings 	                       20,939     19,477

      Total shareholders' equity	             70,189     62,899
      Total liabilities and shareholders'
        equity	                               $126,117   $108,598

	See accompanying notes to condensed financial statements.



 Schedule II - Condensed Financial Information of Registrant -
                         (continued)

                  STANDARD MANAGEMENT CORPORATION
                        (PARENT COMPANY)

                   CONDENSED STATEMENTS OF INCOME
                       (Dollars in Thousands)



                                       Year Ended December 31
                                          2001      2000    1999
Revenues:
  Management fees from subsidiaries      $4,750    $3,850  $3,575
  Interest income from subsidiaries	  2,615     3,209   2,837
  Rental income from subsidiaries	       1,100     1,100   1,040
  Other income	                              40       409     126
  Net realized investment losses	      (1,310)     (820)   (250)
      Total revenues	                 7,195     7,748   7,328

Expenses:
  Other operating expenses	            4,332     4,487   4,763
  Interest expense and financing costs	  3,492     3,416   3,380
  Interest expense on note payable to
    affiliate	                             152       179     142
      Total expenses	                 7,976     8,082   8,285

Loss before federal income taxes, equity
  in earnings of consolidated subsidiaries,
  extraordinary loss and preferred stock
  dividends	                            (781)    (334)    (957)
Federal income tax expense (benefit)	    (34)  (1,145)    (417)

Income (loss) before equity in earnings of
  Consolidated subsidiaries, extraordinary
  loss and preferred stock dividends	   (747)     811     (540)
Equity in earnings of consolidated
  subsidiaries	                           2,527    4,815    5,812
Income before extraordinary loss and
 preferred stock dividends	            1,780    5,626    5,272
Extraordinary loss                           --     (359)      --
Net income	                           1,780    5,267    5,272
Preferred stock dividends	             (318)    (506)    (506)
Earnings available to common
  shareholders                           $1,462   $4,761   $4,766

	See accompanying notes to condensed financial statements.



Schedule II - Condensed Financial Information of Registrant -
(continued)

                   STANDARD MANAGEMENT CORPORATION
                          (PARENT COMPANY)

                  CONDENSED STATEMENTS OF CASH FLOWS
                       (Dollars in Thousands)

                                         Year Ended December 31
                                          2001      2000    1999
Operating Activities
Net income 	                          $1,780    $5,267  $5,272
Adjustments to reconcile net income to
  net cash provided by operating
  activities:
  Depreciation and amortization	         801       650     645
  Equity in earnings of subsidiaries	 (2,527)   (4,815) (5,812)
  Dividends	                           2,100     2,500      --
  Net realized investment losses	       1,310       820     250
  Other                                    (355)     (909)    280
      Net cash provided by operating
        activities	                      3,109     3,513     635

Investing Activities
Investments, net	                       (321)       98     (46)
Purchase of property and equipment, net	(12,250)   (1,004)   (866)
      Net cash used by investing
        activities	                    (12,571)     (906)   (912)

Financing Activities
Borrowings	                          28,752    11,000     300
Repayments of notes payable and
  preferred stock	                    (18,930)  (14,000)   (800)
Issuance of common stock and warrants	     (8)      867   1,566
Purchase of common stock for treasury	     --      (304)   (582)
Dividends on preferred stock	             (318)     (506)   (506)
      Net cash provided (used) by
        financing activities	            9,496    (2,943)    (22)
Net decrease in cash	                    34      (336)   (299)
Cash at beginning of year	              305       641     940
Cash at end of year	                     $  339    $  305  $  641


See accompanying notes to condensed financial statements.


Schedule II--Condensed Financial Information of Registrant
(continued)

                  STANDARD MANAGEMENT CORPORATION
                        (PARENT COMPANY)

               NOTES TO CONDENSED FINANCIAL STATEMENTS

                        December 31, 2001


1.	Basis of Presentation

For purposes of these condensed financial statements, Standard
Management carries its investments in subsidiaries at cost plus
equity in undistributed earnings of subsidiaries since date of
acquisition. Net income of its subsidiaries is included in
income using the equity method. These condensed financial
statements should be read in conjunction with our
consolidated financial statements included elsewhere in this
document.


2.	Dividends from Subsidiaries

Standard Management received $1.6 million and $2.5 million of
dividends from subsidiaries in 2001 and 2000, respectively.




                     Schedule IV -- Reinsurance

                  STANDARD MANAGEMENT CORPORATION

            Years Ended December 31, 2001, 2000 and 1999
                      (Dollars in Thousands)

                                                        Percentage
                             Ceded to   Assumed          of Amount
                   Gross     Other    from Other           Assumed
                   Amount   Companies  Companies Net Amount to Net


Year Ended December
 31, 2001
Life insurance in
 force	         $1,309,989 $ 647,053 $ 81,633 $  744,569 10.96%
Premiums:
  Life insurance
    and annuities  $   11,912 $   4,381 $    796 $    8,327
  Accident and
    health insurance	 370        10       --        360
  Supplementary
    contract and other
    funds on deposit	 789        --       --        789
    Total premiums $   13,071 $   4,391 $    796 $    9,476

Year Ended December
  31, 2000
Life insurance in
  force 	         $1,739,302 $ 787,590 $ 90,854 $1,042,566  8.71%
Premiums:
  Life insurance
    and annuities  $   11,634 $   4,783 $    937 $    7,788
  Accident and
    health insurance	 128        12       --        116
  Supplementary
    contract and other
    funds on deposit    1,570        --       --      1,570
    Total premiums $   13,332 $   4,795 $    937 $    9,474

Year Ended December
  31, 1999
Life insurance in
  force	         $2,079,568 $ 837,155 $125,120 $1,367,533  9.15%
Premiums:
  Life insurance
    and annuities  $   13,780 $   4,908 $    904 $    9,776
  Accident and
    health insurance   18,710    18,365       --        345
  Supplementary
    contract and other
    funds on deposit	 260        --       --        260
    Total premiums $   32,750 $  23,273 $    904 $   10,381

EXHIBIT 23.1


Consent of Independent Auditors


We consent to the incorporation by reference in the Registration
Statement (Form S-8 No. 33-92906) pertaining to the
Second Amended and Restated Stock Option Plan of Standard
Management Corporation, the Registration Statement (Form S-8
No. 333-41119) pertaining to the Amended and Restated Stock Option
Plan of Standard Management Corporation and the
Registration Statement (Form S-8 No. 333-41117) pertaining to the
Standard Management Corporation Savings Plan, of our report
dated February 1, 2002, with respect to the consolidated financial
statements and schedules of  Standard Management Corporation
and subsidiaries included in this Form 10-K for the year ended
December 31, 2001.

                                 /s/ Ernst & Young LLP



Indianapolis, Indiana
March 26, 2002







EXHIBIT 23.2


Consent Of Independent Auditors

We consent to the incorporation by reference in the Registration
Statement (Form S-8 No. 33-92906) pertaining to the
Second Amended and Restated Stock Option Plan of Standard
Management Corporation, the Registration Statement (Form S-8
No. 333-41119) pertaining to the Amended and Restated Stock Option
Plan of Standard Management Corporation and the
Registration Statement (Form S-8 No. 333-41117) pertaining to the
Standard Management Corporation Savings Plan, of our report
dated February 14, 2002, with respect to the consolidated
balance sheets of Standard Management International S. A.
and subsidiaries, as at September 30, 2001 and 2000 and the
related consolidated statements of operations, shareholders'
equity and comprehensive income, and cash flows for each of the
years in the three-year period ended September 30, 2001 included
in the Annual Report on Form 10-K of Standard Management
Corporation.

KPMG Audit

Luxembourg
March 26, 2002